What constitutes a secured transaction?

A secured transaction occurs when a borrower takes out a loan or credit and uses personal property as collateral to secure the debt. In this scenario, the lender has a security interest in the collateral, which provides them with rights over the personal property in case the borrower defaults on the loan. This arrangement is crucial because it minimizes the lender's risk by giving them a claim on the collateral, which can be seized and sold to recover the outstanding debt.

The essence of a secured transaction lies in the security interest created by the lender, which is an integral part of commercial financing and lending practices. While a mortgage pertains specifically to real estate transactions, a secured transaction typically involves personal property, such as equipment or inventory, which makes the business deal mentioned in the correct answer representative of what constitutes a secured transaction.

In contrast, the options that describe unsecured loans or transactions without a security interest do not fit within the framework of secured transactions, as they do not involve any collateral to back the loan.