Final answer:
Collateral under UCC Article 9 typically includes assets that can be seized and sold by a lender if a borrower defaults. In the given options, future income is generally not accepted as collateral because it's not a tangible asset or assignable right at the time of the agreement.
Step-by-step explanation:
Under UCC Article 9, collateral is defined as something valuable—often property or equipment—that a lender has a right to seize and sell if the borrower does not repay the loan.
Among the options listed, Options 1: Inventory, Option 2: Accounts receivable, and Option 4: Intellectual property, can all be used as collateral. However, Option 3: Future income generally does not qualify as collateral under UCC Article 9 because it is not a tangible asset or specific right that can be sold or assigned at the time of the security agreement.
Collateral serves as a form of insurance against unforeseen, detrimental events, similar to how a money-back guarantee can function as a promise of quality for goods sold by a company through mail-order catalogs or on the web. Other physical items such as a house, land, art, rare coins or stamps are examples of assets that can commonly serve as collateral.