Question 1

Under Article 9 of the UCC,whatever is received upon the sale,exchange,collection,or other disposition of collateral,is classified as:

Accepted Answer

A)  proceeds 
B)  goods 
C)  documents 
D)  value 
A)  proceeds 
B)  goods 
C)  documents 
D)  value

Question 2

Perfection is necessary in order for a creditor to have a valid security interest.

Accepted Answer

A) True 
 B)False

Question 3

A car dealer borrowed $500,000 from a bank and signed a security agreement giving the bank a security interest in "all current inventory,and all inventory acquired in the future." The bank forgot to file a financing statement.One year later,the car dealer defaults.At the time of default,the dealer owed $400,000 and had 275 cars in inventory,only 15 of which had been in inventory when the security agreement was signed.What can the bank do with respect to the dealer's inventory?

Accepted Answer

A)  Repossess all the cars,sell them,and keep all of the proceeds. 
B)  Repossess all the cars,sell them,and keep the proceeds,but not more than $500,000. 
C)  Repossess all the cars,sell them,and keep the proceeds,but not more than $400,000. 
D)  Repossess only the 15 cars that were in inventory when the security agreement was signed,sell them,and keep the proceeds,but not more than $400,000. 
E)  Not repossess any of the cars because the bank has not filed a financing statement. 
A)  Repossess all the cars,sell them,and keep all of the proceeds. 
B)  Repossess all the cars,sell them,and keep the proceeds,but not more than $500,000. 
C)  Repossess all the cars,sell them,and keep the proceeds,but not more than $400,000. 
D)  Repossess only the 15 cars that were in inventory when the security agreement was signed,sell them,and keep the proceeds,but not more than $400,000. 
E)  Not repossess any of the cars because the bank has not filed a financing statement.

Question 4

Which of the following is true about attachment and perfection of security interests?

Accepted Answer

A)  A security interest may be either attached or perfected,but not both. 
B)  A security interest must be perfected before it can attach. 
C)  A security interest may be enforced by the creditor even if it has not been perfected,so long as it has attached. 
D)  Attachment generally gives the same rights to the secured party as perfection. 
A)  A security interest may be either attached or perfected,but not both. 
B)  A security interest must be perfected before it can attach. 
C)  A security interest may be enforced by the creditor even if it has not been perfected,so long as it has attached. 
D)  Attachment generally gives the same rights to the secured party as perfection.

Question 5

When a valid security interest becomes effective as between debtor and creditor,it is said to:

Accepted Answer

A)  terminate the debtor's interest 
B)  attach to the subject matter 
C)  become perfected 
D)  entitle the creditor to possession 
A)  terminate the debtor's interest 
B)  attach to the subject matter 
C)  become perfected 
D)  entitle the creditor to possession

Question 6

More than one creditor can have a perfected security interest in the same collateral.

Accepted Answer

A) True 
 B)False

Question 7

Pat went to Eighth National Bank in Oregon and obtained a loan to purchase a computer from a friend.Pat signed a security agreement granting the bank a security interest in the computer.Pat planned to use this computer in his home-based publishing business.The bank gave Pat $2,500 to use in purchasing the computer.However,Pat immediately went to Las Vegas without purchasing the computer and has not been seen since.The bank has filed a financing statement covering the computer.The bank wants the computer.Can the bank get the computer?

Accepted Answer

A)  Yes,because the computer is equipment. 
B)  Yes,so long as no one else had an earlier perfected security interest in the computer. 
C)  No,because Pat is no longer in the state of Oregon. 
D)  No,because the security interest has not attached yet. 
E)  No,because the bank must first try to collect from Pat. 
A)  Yes,because the computer is equipment. 
B)  Yes,so long as no one else had an earlier perfected security interest in the computer. 
C)  No,because Pat is no longer in the state of Oregon. 
D)  No,because the security interest has not attached yet. 
E)  No,because the bank must first try to collect from Pat.

Question 8

Harco is a retailer of appliances.Harco buys its inventory from RST,Inc.,the manufacturer.To finance its inventory,Harco buys appliances from RST on credit,signing a promissory note and giving RST a security interest in the inventory.RST perfects this security interest.Harco also needed cash for working capital,so Harco borrowed money form First Bank,giving First Bank a security interest in Harco's inventory.First Bank perfected this security interest before RST perfected its security interest.Harco cannot pay is debts,so both RST and First Bank attempt to foreclose on this inventory.Discuss who has priority and why?

Accepted Answer

Normally,the first to perfect has priori

Question 9

Which of the following are rules established by the UCC when determining priority among conflicting claims of creditors?

Accepted Answer

A)  A secured creditor's interest is equal to an unsecured creditor's interest. 
B)  A perfected security interest has priority over a mere interest in the same collateral. 
C)  If there are two or more perfected security interest in the same collateral,the last to perfect has priority as it is the most recent interest that has been filed. 
D)  All of these are correct. 
A)  A secured creditor's interest is equal to an unsecured creditor's interest. 
B)  A perfected security interest has priority over a mere interest in the same collateral. 
C)  If there are two or more perfected security interest in the same collateral,the last to perfect has priority as it is the most recent interest that has been filed. 
D)  All of these are correct.

Question 10

A secured party may sell,lease,or otherwise dispose of collateral.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not one of the general categories of goods subject to a security interest under Article 9 of the UCC?

Accepted Answer

A)  consumer goods 
B)  equipment 
C)  building materials 
D)  farm products 
E)  inventory 
A)  consumer goods 
B)  equipment 
C)  building materials 
D)  farm products 
E)  inventory

Question 12

Which security interests are perfected at the moment of attachment?

Accepted Answer

A)  all security interests 
B)  all purchase money security interests 
C)  all consumer good security interests 
D)  all consumer good purchase money security interests 
E)  all pledges 
A)  all security interests 
B)  all purchase money security interests 
C)  all consumer good security interests 
D)  all consumer good purchase money security interests 
E)  all pledges

Question 13

A security agreement can cover:

Accepted Answer

A)  property not owned at the time of the agreement,but acquired later 
B)  credit not owed at the time of the agreement,but acquired later 
C)  neither A nor B 
D)  both A and B 
A)  property not owned at the time of the agreement,but acquired later 
B)  credit not owed at the time of the agreement,but acquired later 
C)  neither A nor B 
D)  both A and B

Question 14

Which of the following occurs upon the attachment of a security interest?

Accepted Answer

A)  The creditor obtains certain rights that become effective if the debtor defaults. 
B)  The creditor's security interest will obtain priority over all later security interests. 
C)  Notice is given to the world that the creditor has a security interest in the collateral. 
D)  Title to the collateral shifts to the creditor. 
E)  The creditor obtains possession of the collateral. 
A)  The creditor obtains certain rights that become effective if the debtor defaults. 
B)  The creditor's security interest will obtain priority over all later security interests. 
C)  Notice is given to the world that the creditor has a security interest in the collateral. 
D)  Title to the collateral shifts to the creditor. 
E)  The creditor obtains possession of the collateral.

Question 15

In order to perfect a security interest by filing,which is true about the items to be filed?

Accepted Answer

A)  In all cases,the financing statement must be filed. 
B)  In all cases,the security agreement must be filed. 
C)  In all cases,both the financing statement and the security agreement must be filed. 
D)  In all cases,the financing statement and underlying loan agreement must be filed. 
E)  In all cases,the financing statement must be filed,except that the security agreement can be substituted for the financing statement if desired. 
A)  In all cases,the financing statement must be filed. 
B)  In all cases,the security agreement must be filed. 
C)  In all cases,both the financing statement and the security agreement must be filed. 
D)  In all cases,the financing statement and underlying loan agreement must be filed. 
E)  In all cases,the financing statement must be filed,except that the security agreement can be substituted for the financing statement if desired.

Question 16

If a debtor who purchases an item with unsecured credit defaults on the loan,the creditor's only means of recourse is to sue the debtor to try to recover the unpaid loan amount.

Accepted Answer

A) True 
 B)False

Question 17

A financing statement covering fixtures is called a blanket filing.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following statements is false?

Accepted Answer

A)  If the proceeds from the sale of the collateral do not pay the underlying debt,the creditor may obtain a deficiency judgment against the debtor. 
B)  If the proceeds from the sale of the collateral are more than the underlying debt and expenses,the debtor has a right to the excess. 
C)  Generally,the debtor has a right of redemption as to the collateral. 
D)  In all cases,the creditor has the right to retain the collateral. 
A)  If the proceeds from the sale of the collateral do not pay the underlying debt,the creditor may obtain a deficiency judgment against the debtor. 
B)  If the proceeds from the sale of the collateral are more than the underlying debt and expenses,the debtor has a right to the excess. 
C)  Generally,the debtor has a right of redemption as to the collateral. 
D)  In all cases,the creditor has the right to retain the collateral.

Question 19

Financing statements are effective for 5 years from the date of filing.

Accepted Answer

A) True 
 B)False

Question 20

Sooner Enterprises needs a large new piece of equipment.Sooner has approximately $100,000 in cash to put toward the $400,000 purchase price.Sooner goes to Adams National Bank and borrows $250,000 for part of the purchase price.Sooner buys the equipment,using the cash from Adams,the $100,000 in cash on hand,and by drawing $50,000 on a preexisting unsecured line of credit.Sooner and Adams National Bank executed a security agreement on March 1,but nothing was ever filed in connection with this security agreement.Adams extended credit and Sooner acquired the equipment on March 2.Two months later,on May 1,Sooner went to Baker National Bank and signed an agreement to borrow $50,000 which would be used to pay back the line of credit used to purchase the equipment.Baker extended the credit to Sooner on May 3,and filed a valid financing statement on May 15.On May 10,Sooner went to Colter National Bank and borrowed $75,000 using the equipment as collateral.On the same day,Colter properly filed a copy of the security agreement with Sooner.In June,Sooner defaulted on all of its debts.Discuss the priority of all its creditors with respect to this equipment.

Accepted Answer

Perfected secured parties take priority

Exam 27: Secured Transactions and Electronic Filing

Under Article 9 of the UCC,whatever is received upon the sale,exchange,collection,or other disposition of collateral,is classified as:

Perfection is necessary in order for a creditor to have a valid security interest.

Which of the following is true about attachment and perfection of security interests?

When a valid security interest becomes effective as between debtor and creditor,it is said to:

More than one creditor can have a perfected security interest in the same collateral.

Which of the following are rules established by the UCC when determining priority among conflicting claims of creditors?

A secured party may sell,lease,or otherwise dispose of collateral.

Which of the following is not one of the general categories of goods subject to a security interest under Article 9 of the UCC?

Which security interests are perfected at the moment of attachment?

A security agreement can cover:

Which of the following occurs upon the attachment of a security interest?

In order to perfect a security interest by filing,which is true about the items to be filed?

If a debtor who purchases an item with unsecured credit defaults on the loan,the creditor's only means of recourse is to sue the debtor to try to recover the unpaid loan amount.

A financing statement covering fixtures is called a blanket filing.

Which of the following statements is false?

Financing statements are effective for 5 years from the date of filing.

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