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    What are the differences between secured and nonsecured transactions?

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    Please help with the following problem.

    Transactions between two parties may take the basic form of either secured or nonsecured. Compare and contrast the two and describe in detail the risks of each.

    Level: Master Accounting and CPA.

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    Solution Preview

    In United States and other developed countries, businesses and individuals use credit to purchase goods and services. In a credit transaction, the debtor is referred to as the borrower while the creditor is referred to as the lender. Credit transactions come in two forms namely secured and unsecured transaction. Unsecured transaction is a type of credit that does not require security to protect the payment of the debt. In this type of transaction, the creditor trust the debtors promise to repay the principal and the interest when it is due. Even though the transaction is unsecure, the creditor has the right to file charges against the debtor should the debtor fail ...

    Solution Summary

    This solution details the differences between secured and nonsecured transactions. The explanation is given in 426 words.