Question : Which of the following statements is true?
Option 1: Collateral security means secondary security in addition to principal security.
Option 2: The bank or the other persons to whom such debentures are issued as collateral security will not be entitled to any interest on these debentures.
Option 3: Bank are entitled to get interest on the original loan advanced by them.
Option 4: All of the above
Correct Answer: All of the above
Solution : Answer = All of the above
All the statements are true regarding collateral security. Collateral security serves as secondary security alongside the principal security, providing additional assurance to the creditor. Those holding debentures as collateral security typically do not receive interest, while banks are entitled to interest on the original loan they extend.
Hence, the correct option is 4.
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