Question

Which of the following types of legal claims (lien) against inventory is generally used by lending institutions when the inventory put up as collateral is relatively low priced, fast moving, and difficult to identify individually?

O a blanket lien
O a warehouse receipt
O a recourse order
O a trust receipt
O an equity financing scheme

Answer 1

A blanket lien is the correct type of lien used by lending institutions for inventory that is low-priced, fast-moving, and not individually identifiable.

Step-by-step explanation:

The type of legal claim (lien) against inventory that is generally used by lending institutions when inventory serves as collateral and the goods in question are relatively low-priced, fast-moving, and difficult to identify individually is known as a blanket lien. A blanket lien provides a broad legal claim against all inventory of the borrower, not tied to any specific item, which is suitable when those items are frequently changing or non-specific. In comparison, other options like warehouse receipts, recourse orders, trust receipts, or equity financing schemes are typically more specific or relate to different sorts of financial or legal arrangements.

The correct option in the final answer for the type of lien used by lending institutions under the described circumstances is a blanket lien.