Thanh is the general director of Invest Company, which manufactures children’s toys. The business is growing rapidly, but it requires capital in order to develop its markets further.Thanh has explored two possible ways of raising capital. Action Bank is prepared to lend the necessary funds but insists on a legal mortgage over the factory as a condition for sanctioning a loan. Finance Bank is prepared to advance a larger sum of money without a mortgage but requires a personal guarantee from Thanh, as it knows that Thanh’s family is wealthy.Required:
(b) With reference to the legal characteristics of these types of security, explain the risks that Thanh should consider before taking his decision. (4 marks)
