Define "collateral".

Collateral refers to an asset that a borrower offers to a lender to secure a loan. This asset serves as a guarantee that the lender will be compensated in the event that the borrower defaults on the loan. By placing collateral against the loan, the borrower reduces the risk for the lender, which can often lead to better loan terms such as lower interest rates or higher borrowing limits. Common examples of collateral include real estate, vehicles, and equipment.

The other options do not accurately reflect the definition of collateral. Bank insurance pertains to protection against financial loss rather than securing a loan. Measuring risk involves analytical methods and does not directly define collateral. A financial investment category describes a broader classification of investment types rather than specifying an asset used as security for borrowing.