Question

question 10

when a loan is backed by an asset that can be seized if payments are missed, it is referred to as ________ financing.

• equity
• unsecured
• lease
• secured

Explanation:

Analyze the definition of the loan type

The question asks for the term used when a loan is backed by an asset (collateral) that can be seized if payments are missed.

Evaluate the given options

• equity: Financing raised by selling shares of ownership in the company, not backed by collateral.
• unsecured: Financing that is not backed by any collateral or asset.
• lease: A contract outlining the terms under which one party agrees to rent property owned by another party.
• secured: Financing backed by an asset (collateral) to reduce the lender's risk. If the borrower defaults, the lender can seize the asset.

Select the correct option

The definition perfectly matches "secured" financing.

Answer:

• equity
• unsecured
• lease
• secured (Correct answer)