What term denotes property that is pledged as security for a debt?

What term denotes property that is pledged as security for a debt?

• A. Collateral
• B. Assurance
• C. Certainty
• D. Pledge

Answer: (A)

The term that denotes property pledged as security for a debt is "collateral." In the context of loans, collateral serves as a form of security for the lender, ensuring that if the borrower defaults on the loan, the lender has the right to seize the collateral to recover their losses. This practice mitigates the risk for lenders and can also make it easier for borrowers to obtain loans, as offering collateral may result in better terms. The other terms mentioned do not specifically relate to the concept of property pledged for securing debt. Assurance generally refers to a promise or guarantee, certainty relates to the state of being sure or confident, and a pledge can mean a commitment or promise but is not exclusively used in the context of securing a debt. Therefore, collateral is the precise term that encapsulates the concept of security for a debt in property terms.

The term that denotes property pledged as security for a debt is "collateral." In the context of loans, collateral serves as a form of security for the lender, ensuring that if the borrower defaults on the loan, the lender has the right to seize the collateral to recover their losses. This practice mitigates the risk for lenders and can also make it easier for borrowers to obtain loans, as offering collateral may result in better terms.

The other terms mentioned do not specifically relate to the concept of property pledged for securing debt. Assurance generally refers to a promise or guarantee, certainty relates to the state of being sure or confident, and a pledge can mean a commitment or promise but is not exclusively used in the context of securing a debt. Therefore, collateral is the precise term that encapsulates the concept of security for a debt in property terms.