Question

Collateral is A. the difference between the value of a​ bank's assets and the value of a​ bank's liabilities. B. assets pledged to the bank in the event the borrower defaults. C. the interest rate that banks charge highminusquality borrowers. D. required reserves minus excess reserves.

Answer 1

B) assets pledged to the bank in the event the borrower defaults.

Step-by-step explanation:

There are two types of bank loans:

1. secured loans: the borrower pledges an asset (or assets) as collateral for the loan, e.g. a car is pledged as collateral for an auto loan.
2. unsecured loans: basically personal loans, where the loan is handed out based on the borrower's creditworthiness (usually established by the borrower's credit score), and no collateral is pledged.

Answer 2

B. assets pledged to the bank in the event the borrower defaults.

Step-by-step explanation:

Collateral are assets pledged to the bank in the event the borrower defaults.

They are used to assess loans from a bank. They protect banks from possible loss if the lender should default on his loans. If a default occurs, the collateral qoold je owned by the bank.

Types of collateral are :

1. Real estate

2. Inventory financing: inventory serves as collateral

3. Cash secured loan

I hope my answer helps you