Asked by Anthony Rodriguez on Jul 21, 2024
Verified
Warehousing places the pledged inventory under the lender's legal and physical control.
Warehousing
In finance, a method of securing the lender’s interest when borrowing is secured by inventories. The inventory is placed in a warehouse operated by a third party. When it is drawn out of the warehouse by the borrower, a pro rata share of payment on the loan is due.
Legal Control
The power or authority to direct the management and policies of a company or organization, typically through ownership of voting shares or by contract.
- Determine the diverse categories of collateral and how they are utilized in securing loans.
Verified Answer
MS
Mochiko SueyoshiJul 25, 2024
Final Answer :
True
Explanation :
When inventory is pledged as collateral, it is typically moved to a warehouse where it is under the control of the lender. This provides assurance that the inventory will not be sold or used as collateral for other loans.
Learning Objectives
- Determine the diverse categories of collateral and how they are utilized in securing loans.