Question 1

When consumer goods are involved, a termination statement must be filed within a month after the debt is paid.​

Accepted Answer

A) True 
 B)False  True

Question 2

Don repays his debt, incurred to buy consumer goods, to EZ Retail Credit and immediately files a written request for a termination statement. EZ​

Accepted Answer

A)  ​must comply within one month of receipt of the letter. 
B)  ​must comply within twenty days of receipt of the letter. 
C)  ​must refund $500 to Don. 
D)  ​need not comply. 
A)  ​must comply within one month of receipt of the letter. 
B)  ​must comply within twenty days of receipt of the letter. 
C)  ​must refund $500 to Don. 
D)  ​need not comply. B

Question 3

The payment of Janitorial Service's debt to Business Finance, Inc., is guaranteed by the service's personal property. Business Finance is​

Accepted Answer

A)  ​a debtor. 
B)  ​a secured creditor. 
C)  ​a security interest. 
D)  ​a secured party. 
A)  ​a debtor. 
B)  ​a secured creditor. 
C)  ​a security interest. 
D)  ​a secured party. D

Question 4

Olaf is the creditor in a transaction with Phil. Once certain requirements are met, Olaf's rights will attach, which means that Olaf will have​

Accepted Answer

A)  ​an indivisible ownership right to Phil's property. 
B)  ​an enforceable security interest in Phil's property. 
C)  ​a notice affixed to Phil's property. 
D)  ​the permission of a court to seize Phil's property. 
A)  ​an indivisible ownership right to Phil's property. 
B)  ​an enforceable security interest in Phil's property. 
C)  ​a notice affixed to Phil's property. 
D)  ​the permission of a court to seize Phil's property.

Question 5

Fund Credit Corporation asks Gro-Sales Company to agree to a security agreement that provides for coverage of the proceeds from the sale of after-acquired property. This is​

Accepted Answer

A)  ​a first-in-time rule. 
B)  ​a floating lien. 
C)  ​a funds guaranty. 
D)  ​in violation of secured transactions law. 
A)  ​a first-in-time rule. 
B)  ​a floating lien. 
C)  ​a funds guaranty. 
D)  ​in violation of secured transactions law.

Question 6

A debtor is the person in whose favor there is a security interest.​

Accepted Answer

A) True 
 B)False

Question 7

Where and how to perfect a security interest sometimes depends on the classification of the collateral.

Accepted Answer

A) True 
 B)False

Question 8

Advances against lines of credit can be subject to a perfected security interest in certain collateral.

Accepted Answer

A) True 
 B)False

Question 9

City Bank's financing statement in collateral owned by Delta Corporation will expire in less than a year. Filed timely, a continuation statement could extend the effectiveness of the financing statement for​

Accepted Answer

A)  ​one year. 
B)  ​two years. 
C)  ​five years. 
D)  ​ten years. 
A)  ​one year. 
B)  ​two years. 
C)  ​five years. 
D)  ​ten years.

Question 10

The payment of Brian's debt to Chuck is guaranteed by Brian's personal property. This is

Accepted Answer

A)  an attachment.​ 
B)  ​a secured transaction. 
C)  ​perfection. 
D)  ​a violation of most state laws. 
A)  an attachment.​ 
B)  ​a secured transaction. 
C)  ​perfection. 
D)  ​a violation of most state laws.

Question 11

A secured party is any creditor who has a security interest in a debtor's collateral.

Accepted Answer

A) True 
 B)False

Question 12

The payment of Mo's debt to Neil is guaranteed by Mo's personal property. This is governed by​

Accepted Answer

A)  ​the Uniform Commercial Code. 
B)  ​the Federal Trade Commission. 
C)  ​the U.S. Constitution's commerce clause. 
D)  ​the Bankruptcy Reform Act of 2005. 
A)  ​the Uniform Commercial Code. 
B)  ​the Federal Trade Commission. 
C)  ​the U.S. Constitution's commerce clause. 
D)  ​the Bankruptcy Reform Act of 2005.

Question 13

To create an enforceable security interest, the secured party must give value.

Accepted Answer

A) True 
 B)False

Question 14

The payment of Hu's debt to Intrastate Bank is guaranteed by Hu's personal property. To give notice of its interest in Hu's property to other creditors, the bank is most likely to​

Accepted Answer

A)  ​attach a bright label to Hu's property. 
B)  ​e-mail other potential creditors. 
C)  ​file a financing statement with the appropriate authority. 
D)  ​publish a collection notice in local newspapers. 
A)  ​attach a bright label to Hu's property. 
B)  ​e-mail other potential creditors. 
C)  ​file a financing statement with the appropriate authority. 
D)  ​publish a collection notice in local newspapers.

Question 15

Gina borrows from Regional Loan Company the funds to buy a car. The car secures the debt. Gina defaults on the loan. Regional takes possession of the car, planning to sell it to recover some of the unpaid debt. Before the creditor sells the car or enters into a contract for its sale, Gina can pay what she owes and take back the car. This is​

Accepted Answer

A)  ​a deficiency judgment. 
B)  ​a floating lien. 
C)  ​the right of redemption. 
D)  ​the right of retention. 
A)  ​a deficiency judgment. 
B)  ​a floating lien. 
C)  ​the right of redemption. 
D)  ​the right of retention.

Question 16

Lenders Bank files a financing statement regarding a transaction with Metro Construction Company. To be valid, the financing statement must contain all of the following except​

Accepted Answer

A)  ​a description of the collateral. 
B)  ​a statement of the purpose for the transaction. 
C)  ​Lenders' name. 
D)  ​Metro's name. 
A)  ​a description of the collateral. 
B)  ​a statement of the purpose for the transaction. 
C)  ​Lenders' name. 
D)  ​Metro's name.

Question 17

Once default has occurred and the secured party has obtained possession of the collateral, the secured party has no more options.​

Accepted Answer

A) True 
 B)False

Question 18

Attachment gives the creditor an enforceable security interest in the collateral.

Accepted Answer

A) True 
 B)False

Question 19

Fact Pattern 30-1
General Leasing Company (GLC) buys equipment for use as inventory, borrowing $1 million from Business Finance Corporation for a security interest in the equipment. The next day, GLC borrows $500,000 from Commercial Bank, also for a security interest in the equipment. GLC defaults on the loans.
-Refer to Fact Pattern 30-1. Suppose that Business Finance perfects its security interest when GLC takes possession of the equipment. In that circumstance, the party with priority to the collateral on GLC's default would be​

Accepted Answer

A)  ​GLC. 
B)  ​Business Finance and Commercial Bank proportionately. 
C)  ​Business Finance only. 
D)  ​Commercial Bank only. 
A)  ​GLC. 
B)  ​Business Finance and Commercial Bank proportionately. 
C)  ​Business Finance only. 
D)  ​Commercial Bank only.

Question 20

Sam is the secured party in a transaction with Lilly, who is the debtor. Sam files a financing statement with the appropriate state official. The financing statement must contain​

Accepted Answer

A)  ​Lilly's signature. 
B)  ​Sam's bank account information. 
C)  ​Lilly's credit report. 
D)  ​a photograph of the collateral. 
A)  ​Lilly's signature. 
B)  ​Sam's bank account information. 
C)  ​Lilly's credit report. 
D)  ​a photograph of the collateral.

Exam 30: Secured Transactions

When consumer goods are involved, a termination statement must be filed within a month after the debt is paid.​

Don repays his debt, incurred to buy consumer goods, to EZ Retail Credit and immediately files a written request for a termination statement. EZ​

The payment of Janitorial Service's debt to Business Finance, Inc., is guaranteed by the service's personal property. Business Finance is​

Olaf is the creditor in a transaction with Phil. Once certain requirements are met, Olaf's rights will attach, which means that Olaf will have​

Fund Credit Corporation asks Gro-Sales Company to agree to a security agreement that provides for coverage of the proceeds from the sale of after-acquired property. This is​

A debtor is the person in whose favor there is a security interest.​

Where and how to perfect a security interest sometimes depends on the classification of the collateral.

Advances against lines of credit can be subject to a perfected security interest in certain collateral.

City Bank's financing statement in collateral owned by Delta Corporation will expire in less than a year. Filed timely, a continuation statement could extend the effectiveness of the financing statement for​

The payment of Brian's debt to Chuck is guaranteed by Brian's personal property. This is

A secured party is any creditor who has a security interest in a debtor's collateral.

The payment of Mo's debt to Neil is guaranteed by Mo's personal property. This is governed by​

To create an enforceable security interest, the secured party must give value.

The payment of Hu's debt to Intrastate Bank is guaranteed by Hu's personal property. To give notice of its interest in Hu's property to other creditors, the bank is most likely to​

Lenders Bank files a financing statement regarding a transaction with Metro Construction Company. To be valid, the financing statement must contain all of the following except​

Once default has occurred and the secured party has obtained possession of the collateral, the secured party has no more options.​

Attachment gives the creditor an enforceable security interest in the collateral.

Sam is the secured party in a transaction with Lilly, who is the debtor. Sam files a financing statement with the appropriate state official. The financing statement must contain​

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Filters

When consumer goods are involved, a termination statement must be filed within a month after the debt is paid.

Don repays his debt, incurred to buy consumer goods, to EZ Retail Credit and immediately files a written request for a termination statement. EZ

The payment of Janitorial Service's debt to Business Finance, Inc., is guaranteed by the service's personal property. Business Finance is

Olaf is the creditor in a transaction with Phil. Once certain requirements are met, Olaf's rights will attach, which means that Olaf will have

Fund Credit Corporation asks Gro-Sales Company to agree to a security agreement that provides for coverage of the proceeds from the sale of after-acquired property. This is

A debtor is the person in whose favor there is a security interest.

City Bank's financing statement in collateral owned by Delta Corporation will expire in less than a year. Filed timely, a continuation statement could extend the effectiveness of the financing statement for

The payment of Mo's debt to Neil is guaranteed by Mo's personal property. This is governed by

The payment of Hu's debt to Intrastate Bank is guaranteed by Hu's personal property. To give notice of its interest in Hu's property to other creditors, the bank is most likely to

Lenders Bank files a financing statement regarding a transaction with Metro Construction Company. To be valid, the financing statement must contain all of the following except

Once default has occurred and the secured party has obtained possession of the collateral, the secured party has no more options.

Sam is the secured party in a transaction with Lilly, who is the debtor. Sam files a financing statement with the appropriate state official. The financing statement must contain