### What is typically used as security in a home equity loan? - [x] The borrower's home - [ ] Personal savings account - [ ] Stock portfolio - [ ] Automobile > **Explanation:** In a home equity loan, the borrower's home is typically used as security or collateral. This allows lenders to offer lower interest rates, as the risk is mitigated by the asset backing the loan. ### What is another term commonly used for "security" in loan documents? - [ ] Alignment - [ ] Recognition - [x] Collateral - [ ] Guarantee > **Explanation:** "Collateral" is another term commonly used for "security" in loan documents. It refers to any valuable asset that a borrower pledges to secure a loan. ### What might a bank do if a loan secured by an asset is not repaid? - [ ] Increase the loan amount - [x] Take the security asset to an auction to be sold - [ ] Reduce the interest rate - [ ] Extend the loan term > **Explanation:** If a loan is not repaid, the bank or lender will take the security asset, such as property, to an auction to be sold. This helps recover the remaining balance of the loan. ### What does a security deposit typically secure? - [ ] A credit card account - [ ] A car loan - [x] A property rental - [ ] A personal loan > **Explanation:** A security deposit typically secures a property rental. It is used to cover any potential damage to the rental property upon termination of a lease. ### Why might a home equity loan have a lower interest rate compared to an unsecured loan? - [ ] Because it is government-subsidized - [x] Because it is backed by collateral like the home - [ ] Because it has a shorter term - [ ] Because it has a higher loan amount > **Explanation:** A home equity loan might have a lower interest rate compared to an unsecured loan because it is backed by collateral, such as the borrower's home. This reduces the risk for the lender. ### What form can security take for a loan? - [ ] Only cash - [x] Anything of value - [ ] Only movable property - [ ] Only land > **Explanation:** Security for a loan can take any form of value, including real estate, automobiles, savings accounts, and other assets. ### What happens to the remaining balance if the security asset sold at auction does not cover the entire loan amount? - [ ] The balance is written off - [ ] The lender absorbs the loss - [x] The borrower must pay the remaining balance - [ ] The loan is refinanced > **Explanation:** If the security asset sold at auction does not cover the entire loan amount, the borrower is typically responsible for paying the remaining balance. ### Besides loans, where is the term "security deposit" commonly used? - [ ] Credit card applications - [ ] Mortgage approvals - [x] Property rentals - [ ] Car leases > **Explanation:** The term "security deposit" is commonly used in property rentals. It refers to a cash deposit given to secure the property and cover potential damages. ### What typically happens to a security deposit upon the termination of a lease if no damage is found? - [ ] It is kept by the landlord - [x] It is returned to the tenant - [ ] It is divided between tenant and landlord - [ ] It is used to pay the last month’s rent > **Explanation:** If no damage is found upon the termination of a lease, the security deposit is typically returned to the tenant. ### Can stocks be considered as security for a loan? - [ ] No, only real estate can be security - [ ] No, only vehicles can be security - [x] Yes, stocks can be considered as security - [ ] No, only cash can be security > **Explanation:** Stocks can be considered as security for a loan. Financial assets, such as stocks, can serve as collateral just like real estate or other valuable assets.