Collateral secures which asset?

• A. The film's budget
• B. Debts
• C. Net profits
• D. Assets pledged to a lender until a loan is repaid

Answer: (D)

Collateral is an asset pledged to secure a loan, giving the lender a claim to that asset if the borrower doesn’t repay. In film finance, the security comes from assets the borrower pledges to the lender as security for the loan, which stay with the lender until the debt is repaid. The film’s budget isn’t a security interest, it’s operating funds. Net profits are earnings, not assets pledged as security. Debts are the obligation itself, while collateral is the property that backs that obligation. So the asset that collateral secures is the assets pledged to a lender until the loan is repaid.