Nick has a consulting business with monthly billings of $4,00.He rents his office,hardware,and furniture and owns few assets.Nick rents his apartment,has no car,and spends most of his income on leisure.If he came to you,a bank manager,and asked to borrow $10 000 for the purpose of increasing his working capital,which of the following securities would you most likely request?
A) conditional sale contract
B) chattel mortgage
C) security under sections 426 and 427 of the Bank Act
D) assignment of accounts receivable
E) floating charge debenture

Question

Quizplus · Accepted Answer

Since Nick's business has monthly billings, he is likely to have accounts receivable that he can use as collateral. Therefore, the most suitable security would be an assignment of accounts receivable. This would allow the bank to collect the outstanding debts due to Nick's business in case he defaults on the loan.

Nick Has a Consulting Business with Monthly Billings of $4,00