Question

In the question given below, there are two statements marked as Assertion (A) and Reason
(R) Read the statements and choose the correct option
Assertion (A): Collateral is an asset that the borrower owns and uses this as a guarantee to a
lender until the loan is repaid.
Reason (R): Till the loan is repaid the asset belongs to the lender
Options :
(a) Both A and R are true
(b) Both are true but R is not the correct explanation of A
Wel A is comect but Ris wrong
(d) A is wrong but R is correct​

Answer 1

The correct option is d) A is wrong but R is correct​

Explanation:

The question was to choose the right option that represents the assertion and the reason in the most appropriate manner. Hence, option d) is right which says that,

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

and

Till the loan is repaid the asset belongs to the lender

However

Collateral is an asset that the lender owns instead of the borrower and uses this as a guarantee to a  borrower instead of lender until the loan is repaid.

Answer 2

Answer:

A is correct but R is wrong