In: Finance
The asset requirement refers to the lowest amount a person must have in hid or her own possession or to invest in order to take part in a particular activity.
An intangible asset can be defined as an asset that cannot be physically touched or felt in nature like the tangible assets. Few examples can be goodwill, patents, trademarks, and copyrights et cetera.
A negotiable asset means an asset that in possession of a person in the form of an instrument of indebtedness from its creditors. These can be unconditionally transferred to another person as a substitute for money. Some example can be checks, drafts, bearer bonds, promissory notes, and bank notes (currency) et cetera.
A collateral can be defined as an asset that is kept by the borrower with the lender of money as a security for the loan. If the money is not paid by the borrower the lender may seize the property kept as collateral.
A pledge can be defined as a bailment contract that indicates a possessory title for the asset or the equipment; owned by the borrower to a lender in order to secure repayment of the outstanding loan or debt obligation. The Pledge is used to earn security interest. Example of pledge can be a property which is held as a security with the lender.
So, going by the above we can conclude that a secure loan
that requires a borrower to pledge a specific asset to secure the
loan is called the collateral.