What term describes assets that are pledged to secure repayment of a loan?

The term that describes assets pledged to secure the repayment of a loan is collateral. Collateral serves as a form of protection for the lender, ensuring that if the borrower defaults on the loan, the lender can seize the collateral to recover some or all of the outstanding debt. This can include various types of assets, such as real estate, vehicles, or equipment, depending on the terms of the loan agreement.

Current assets, on the other hand, refer to assets that are expected to be converted into cash or used up within one year, such as inventory or accounts receivable. Long-term assets are items that typically provide value beyond the current financial year, including investments and fixed assets, which are properties like land and buildings that are used in operations.

Fixed assets specifically include long-term tangible assets that a company uses in its operations and cannot easily convert to cash, distinguishing them from the concept of collateral. Thus, while collateral can include fixed assets, the term specifically relates to its role in securing loans, making it the accurate term for this question.