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    Question

    A contract between the borrower and lender in which the borrower offers security to the lender and the borrower will have to deliver the assets to the lender and the lender will have legal title to the assets is called:

    A Pledge Correct Answer Incorrect Answer
    B Mortgage Correct Answer Incorrect Answer
    C Lien Correct Answer Incorrect Answer
    D Hypothecation Correct Answer Incorrect Answer
    E Assignment Correct Answer Incorrect Answer

    Solution

    A pledge is a contract between the borrower and lender in which the borrower offers the possession of the security to the lender. The pledger (borrower) will have to deliver the assets to the pledgee (lender) and the lender will have legal title to the assets.   In a mortgage, the assets remain the property of the borrower whereas, in a pledge, the assets will be delivered to the lender, who will have legal title to the assets. Hypothecation is on movable properties and property remains with a borrower.

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