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WAEC Commerce 1995 Question 38

Question 38

Banking

Mr. Ojo borrowed N54,000 from a Commercial Bank and deposited his life assurance certificate with the bank. The certificate deposited serves as

  1. A.a loan repayment
  2. B.a current asset
  3. C.an Interest charged
  4. D.a collateral security
  5. E.a part payment
Show the answer and explanation

Answer: D (a collateral security)

Explanation

A document deposited with a bank to back a loan is collateral security.