Answer (D) is correct . An unsecured loan is a loan made by a bank based on credit information about the borrower and the ability of the borrower to repay the obligation. The loan is not secured by collateral but is made on the signature of the borrower. Revolving credit, bankers’ acceptances, lines of credit, and commercial paper are all unsecured means of borrowing.
Answer (A) is incorrect because A chattel mortgage is a loan secured by personal property (movable property such as equipment or livestock). Also, a floating lien is secured by property, such as inventory, the composition of which may be constantly changing.
Answer (B) is incorrect because A chattel mortgage is a loan secured by personal property (movable property such as equipment or livestock). Also, factoring is a form of financing in which receivables serve as security.
Answer (C) is incorrect because A chattel mortgage is a loan secured by personal property (movable property such as equipment or livestock). Also, a floating lien is secured by property, such as inventory, the composition of which may be constantly changing.
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The forms of short-term borrowing that are unsecured credit are