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SSC GD 2021 PYQ — Question 29

SSC GD Constable (English) - 18th November 2021 Shift 2 • General Awareness • Q29

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______ is an asset that the borrower owns and uses as a guarantee to a lender, until the loan is repaid.

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Correct answer: D

Explanation

The correct answer is option 4 i.e. Collateral.

  • Collateral is an asset pledged by a borrower, to a lender (or a creditor), as security for a loan.
  • Collateral is an asset that a lender accepts as security for extending a loan. If the borrower defaults, then the lender may seize the collateral.
  • The asset, called a 'collateral,' is liquidated by the lender in case the borrower defaults. On the other hand, unsecured loans do not require the borrower to pledge collateral.