alleryCollateral is
Aan asset pledged by the borrower as security against a loan
Binterest charged by a bank
Cloan-application fee
Dtax on interest
Answer & Solution
Correct answer: A. an asset pledged by the borrower as security against a loan
1. Collateral: an asset that the borrower pledges as security.
2. Land, building, vehicle, livestock, deposits etc. are common collateral.
3. If the borrower defaults, the lender can sell the collateral to recover the loan.
_Source: syllabus Understanding Economic Development, Ch 3 "Money and Credit"_
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