Question : Which of the following statements is true?
Option 1: Loans taken are secured by mortgage of the assets purchased is known as primary or principal security.
Option 2: Security given in addition to the primary or principal security is termed or known as Collateral Security.
Option 3: Collateral security is realised by the lender only if the due amount (loan plus interest) cannot be recovered by realising the primary or principal security.
Option 4: All of the above
Correct Answer: All of the above
Solution : Answer = All of the above
In loan agreements, assets purchased typically serve as the primary security. Additional security provided alongside is called collateral security. Collateral security is accessed by the lender only if the primary security is insufficient to cover the outstanding loan amount and interest.
Hence, the correct option is 4.
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