CFI CBCA Loan Security Exam 2026
Questions and Answers
Loan Security Learning Objectives - Answer -01. Compare different types of
security and assets used as security
02. Determine the security value of different assets based on MAST principles
03. Discuss the role of legal counsel and the importance of legal representation
Security is a form of - Answer -insurance that is provided by the borrower.
• No loan should be granted if the lender expects security will have to be enforced
or realized.
• Security is taken as a final safeguard in case of default.
Manage the risk of a borrower defaulting on the loan: - Answer --Assess sources of
loan repayment
-Assess security
Types of security - Answer -Direct
• Real estate
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, • Machinery and equipment
• Inventory
Indirect
• Personal guarantees
• Corporate guarantees
• Letters of comfort
Direct security relates to - Answer -collateral that can be used to secure a loan.
Two ways for a financial institution to secure its financing position using assets: -
Answer -Fixed Charge: (Land, Buildings, Machinery)
• Attaches to a specific item of the company's property.
• The lender has legal right to the asset.
• The charge fixes to the asset.
Floating Charge: (Inventory, A/R, Marketable securities)
• Attaches to a general class of assets.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
Questions and Answers
Loan Security Learning Objectives - Answer -01. Compare different types of
security and assets used as security
02. Determine the security value of different assets based on MAST principles
03. Discuss the role of legal counsel and the importance of legal representation
Security is a form of - Answer -insurance that is provided by the borrower.
• No loan should be granted if the lender expects security will have to be enforced
or realized.
• Security is taken as a final safeguard in case of default.
Manage the risk of a borrower defaulting on the loan: - Answer --Assess sources of
loan repayment
-Assess security
Types of security - Answer -Direct
• Real estate
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
, • Machinery and equipment
• Inventory
Indirect
• Personal guarantees
• Corporate guarantees
• Letters of comfort
Direct security relates to - Answer -collateral that can be used to secure a loan.
Two ways for a financial institution to secure its financing position using assets: -
Answer -Fixed Charge: (Land, Buildings, Machinery)
• Attaches to a specific item of the company's property.
• The lender has legal right to the asset.
• The charge fixes to the asset.
Floating Charge: (Inventory, A/R, Marketable securities)
• Attaches to a general class of assets.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
