Question
You as a banker identified three types of finance that can be taken over by ABC if he can be convinced to change his bank:
You as a banker identified three types of finance that can be taken over by ABC if he can be convinced to change his bank:
- Mortgage bonds over his fixed properties
- Finance (instalment sale agreements) over his vehicles
- Overdraft facility.
You also identified the residential properties and vineyard farm, the vehicles and the fixed deposit as the most suitable types of collateral. Answer the following questions for each of the three prominent types of collateral identified:
i. Can the bank easily obtain effective control or custody over the asset?
ii. Can the bank realise the asset quickly and with little expense?
iii. What is the possibility that the collateral can become worthless?
Complete the table to answer this question. Substantiate your answers with good reasons.
Properties | Vehicles | Fixed deposits | |
Can the bank easily obtain effective control or custody over the asset?
| |||
Can the bank realise the asset quickly and with little expense? | |||
What is the possibility that the collateral can become worthless? |
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