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Personal property may be pledged to secure performance - that is, to ensure payment - of a note. When this fact, together with a description of the property, is stated on the face of the note, the paper is a collateral note. The property pledged in collateral notes is usually in the form of documents of title, such as bonds, a warehouse receipt, or a life insurance policy. A collateral note typically provides for the sale of the security by the payee if the note is not paid when due.
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When this fact, together with a description of the property, is stated on the face of the note, the paper is ________________.
a promissory note
a mortgage note
a notebook
a collateral note