Final answer:
Using bank CDs owned by a borrower's parents as collateral for a loan can be authorized if all parties involved agree to this arrangement. This is consistent with banking practices for securing loans with collateral.
Step-by-step explanation:
The question posed involves the use of bank CDs (certificates of deposit) owned by the borrower's parents as collateral for an unguaranteed portion of a loan. This reflects a typical practice in the financial capital market where lenders seek to secure loans through various means, including requiring collateral. Collateral refers to assets that a lender accepts as security for a loan. It can be property, equipment, or other valuable items, like bank CDs, that the bank has the right to seize and sell if the borrower fails to repay the loan.
In principle, it is indeed possible for a lender to secure a loan with assets owned by a third party, such as the borrower's parents. However, the parents would need to agree to this arrangement since it involves pledging their assets. Thus, the statement that a lender proposes to secure the unguaranteed portion of a loan with bank CDs owned by the borrower's parents can be authorized, provided all parties involved agree to the terms.