Asked by Kaitlyn Conigliaro on Jun 27, 2024
Verified
Methods used by lenders who advance funds with the borrower's inventory as collateral involve varying amounts of administration, attention, and cost. They do not include:
A) trust receipts or chattel mortgage agreements whereby the inventory is specifically identified by serial number and cannot be sold without the lender's permission.
B) warehousing the collateralized inventory at the lender's facility.
C) a blanket lien granting the lender a collateral position in all of the borrower's inventory, which is physically maintained at the borrower's facility.
D) using public or field warehousing facilities.
Chattel Mortgage
A loan arrangement in which personal movable property is used as security for the loan, and the lender holds a mortgage over the chattel.
Trust Receipts
Documents that acknowledge the receipt of goods that are held in trust for the lender until the loan associated with the goods is paid.
Blanket Lien
A type of lien that gives the creditor the rights to seize nearly all types of assets and property of the debtor in the event of default.
- Distinguish between different financing arrangements involving a firm’s inventory as collateral.
Verified Answer
Learning Objectives
- Distinguish between different financing arrangements involving a firm’s inventory as collateral.
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