Which term best refers to items pledged to secure a loan?

The term that best refers to items pledged to secure a loan is collateral. Collateral is an asset that a borrower offers to a lender to secure a loan. In the event that the borrower defaults on the loan, the lender has the right to seize the collateral to recover the owed amount. This practice mitigates the risk taken by the lender since it provides a form of security.

Equity refers to the ownership interest in an asset, typically in real estate, after subtracting any liabilities associated with it. This is distinct from collateral, which specifically relates to items pledged for securing a loan rather than indicating ownership.

Liability represents an obligation that one party owes to another, typically signifying the amounts due to lenders or creditors. While liabilities are related to borrowing, they do not denote the items pledged.

An asset is any resource owned by an individual or company that has economic value. While assets can be used as collateral, not all assets are necessarily pledged in this capacity. Collateral specifically denotes the assets that have been earmarked to secure a loan.

Therefore, collateral is the appropriate term, emphasizing its role as a security measure for lenders in financial transactions.