What is defined as a possession that a borrower offers to a lender?

The correct answer is collateral, which refers to an asset that a borrower pledges to a lender to secure a loan. If the borrower fails to repay the loan, the lender has the legal right to take ownership of the collateral as compensation for the unpaid debt. This practice helps to mitigate the lender's risk, as it provides a form of security that can be liquidated if necessary.

In contrast, debt refers to the amount of money borrowed that must be repaid, and asset generally denotes anything of value owned by an individual or entity. Equity represents ownership in a company or asset after all debts have been settled. While all these terms are relevant in the context of borrowing and lending, collateral specifically pertains to the possession offered as security against a loan.