Quiz on Collateral

Daniel wants to buy a new car but doesn't have enough cash. He decides to take out a loan from the bank and offers his old car as security. What is this old car considered in the context of the loan?

• An asset used as security for a loan

• A type of insurance policy

• A type of loan with high interest

• A government bond

Brucarri is looking to secure a loan from the bank. Which of the following can he use as collateral?

• A credit card

• A title deed to a property

• A personal computer

• A bank statement

Daniel is looking to invest in a new business venture. He hears about loan stock and wants to understand what it means before making a decision. What does loan stock refer to?

• A personal loan

• A government bond

• Shares in a business used to secure a loan

• A type of bank loan

Daniel wants to invest in a company and is considering purchasing a bond. What is a bond?

• A type of insurance

• A long-term loan to a business

• A personal asset

• A short-term loan

Kuane wants to take out a loan to buy a new car. He has some cash savings set aside. What is a cash-secured loan?

• A loan secured by cash savings

• A loan with no collateral

• A loan secured by property

• A loan with high interest rates

What happens if Daniel defaults on a cash-secured loan?

• They lose their business

• They can renegotiate the loan terms

• The lender can claim the funds in their savings account

• They must pay a penalty fee

Daniel is looking to secure a loan for his new business. He approaches a lender and offers his life insurance policy as collateral. Why do lenders accept life insurance policies as collateral?

• They are government-backed

• They have high market value

• They are easy to liquidate

• They provide a guaranteed payout upon death

Brucarri is looking to buy a car and needs a loan. What can he use as collateral for the loan related to the motor vehicle?

• The vehicle's registration

• The title deeds to the vehicle

• The vehicle's insurance policy

• The vehicle's maintenance records

Kuane is looking to secure a loan for his new business and is considering using his appliances as collateral. What type of collateral can appliances serve as?

• For student loans

• Only for personal loans

• For business financing

• For government loans

Daniel is looking to secure a loan using his car as collateral. What is the value of the collateral based on?

• The estimated fair market value

• The initial purchase price

• The sentimental value

• The insurance value