Answer (A) is correct . A trust receipt is an instrument issued by a borrower that provides inventory as collateral. It is signed by the borrower and acknowledges that (1) the inventory is held in trust for the lender, and (2) any proceeds of sale are to be paid to the lender.
Answer (B) is incorrect because Factoring is a means of financing receivables. It provides no security to the lender.
Answer (C) is incorrect because A lockbox merely speeds up receipts. It does not provide security.
Answer (D) is incorrect because Underwriting is a means of selling securities. It is unrelated to inventory financing.
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