Which type of collateral cannot be perfected by possession?

The correct choice indicates that accounts receivable cannot be perfected by possession, which reflects an understanding of the UCC (Uniform Commercial Code) framework governing secured transactions. In Georgia and other jurisdictions, the perfection of a security interest in collateral typically depends on the nature of that collateral.

In the case of accounts receivable, they represent a right to payment, which does not exist in a physical form that can be possessed. Instead, perfection of a security interest in accounts receivable is generally achieved through filing a financing statement with the appropriate authority. This filing puts third parties on notice regarding the secured party's interest in the receivables.

Conversely, other types of collateral, such as investment property, physical goods, and negotiable documents, can be perfected by possession. For instance, physical goods can be retained by the secured party, investment property may be controlled, and negotiable documents can be physically delivered to the secured party to establish perfection.

Understanding the characteristics and perfection methods for various types of collateral is critical for navigating secured transactions effectively. This knowledge also supports secured parties in protecting their interests and ensuring they maintain enforceable security interests against third parties.