Question 1

To attach a security interest, the agreement must be signed by the debtor.

Accepted Answer

A) True 
 B)False

Question 2

The sale of stock in the company or the sale of negotiable instruments that are subject to securities regulation is known as:

Accepted Answer

A)  sale financing 
B)  debt financing 
C)  credit financing 
D)  bankruptcy 
E)  none of the other choices are correct 
A)  sale financing 
B)  debt financing 
C)  credit financing 
D)  bankruptcy 
E)  none of the other choices are correct

Question 3

Once a bankruptcy is finished, bankrupts are relieved of paying all debts.

Accepted Answer

A) True 
 B)False

Question 4

If a negotiable instrument is assigned, the assignee has:

Accepted Answer

A)  the same contract rights and responsibilities as the assignor 
B)  the same contract rights as the assignor, but is relieved of assignor's responsibilities 
C)  the same responsibilities as the assignor, but not the contract rights of the assignor 
D)  neither the rights or responsibilities of the assignors; those are determined by a new contract between the parties 
E)  none of the other choices 
A)  the same contract rights and responsibilities as the assignor 
B)  the same contract rights as the assignor, but is relieved of assignor's responsibilities 
C)  the same responsibilities as the assignor, but not the contract rights of the assignor 
D)  neither the rights or responsibilities of the assignors; those are determined by a new contract between the parties 
E)  none of the other choices

Question 5

A(n) ____ is a statutory procedure under which a creditor gains the right to attach up to 25 percent of a customer's net wages to be applied to an outstanding debt.

Accepted Answer

A)  easement 
B)  financing lien 
C)  lien 
D)  mortgage 
E)  none of the other choices are correct 
A)  easement 
B)  financing lien 
C)  lien 
D)  mortgage 
E)  none of the other choices are correct

Question 6

A financial institution that receives a promissory note has the right to:

Accepted Answer

A)  sell the note to another party 
B)  demand the U.S. Treasury redeem the note 
C)  change the interest terms of the note 
D)  demand repayment of the loan before the originally agreed upon time 
E)  none of the other choices are correct 
A)  sell the note to another party 
B)  demand the U.S. Treasury redeem the note 
C)  change the interest terms of the note 
D)  demand repayment of the loan before the originally agreed upon time 
E)  none of the other choices are correct

Question 7

The most common bankruptcy proceeding is known as adjustment of debt.

Accepted Answer

A) True 
 B)False

Question 8

A(n) ____ is a legally binding written order to pay a fixed sum of money that involves three parties.

Accepted Answer

A)  promissory note 
B)  real estate mortgage note 
C)  balloon note 
D)  easement 
E)  none of the other choices are correct 
A)  promissory note 
B)  real estate mortgage note 
C)  balloon note 
D)  easement 
E)  none of the other choices are correct

Question 9

When a company gives credit to a customer, it may create which of the following?

Accepted Answer

A)  a retainer account 
B)  an installment account 
C)  an open account 
D)  an installment account or an open account 
E)  an installment account or an open account or a retainer account 
A)  a retainer account 
B)  an installment account 
C)  an open account 
D)  an installment account or an open account 
E)  an installment account or an open account or a retainer account

Question 10

When personal property is used as collateral to back up a loan, the note created is a:

Accepted Answer

A)  balloon note 
B)  fixed note 
C)  personal note 
D)  property note 
E)  none of the other choices are correct 
A)  balloon note 
B)  fixed note 
C)  personal note 
D)  property note 
E)  none of the other choices are correct

Question 11

In General Electric Business Financial Services v. Silverman, where Silverman failed to repay a loan from GE Financial after his company went bankrupt, despite having signed a guarantee to repay the loan even if the company went bankrupt, the district court:

Accepted Answer

A)  granted the plaintiff's movement for summary judgment because the Illinois Credit Agreement Act bars affirmative defenses that rely on oral promises that contradict the written terms of the agreement 
B)  did not grant the plaintiff's movement for summary judgment because the Illinois Credit Agreement Act bars affirmative defenses that rely on oral promises that contradict the written terms of the agreement 
C)  did not grant plaintiff's movement for summary judgment because the Illinois Credit Agreement Act allows affirmative defenses that rely on oral promises that contradict the written terms of the agreement 
D)  dismissed the case for lack of written evidence of an existing contract 
E)  dismissed the case due to improper filing of court documents 
A)  granted the plaintiff's movement for summary judgment because the Illinois Credit Agreement Act bars affirmative defenses that rely on oral promises that contradict the written terms of the agreement 
B)  did not grant the plaintiff's movement for summary judgment because the Illinois Credit Agreement Act bars affirmative defenses that rely on oral promises that contradict the written terms of the agreement 
C)  did not grant plaintiff's movement for summary judgment because the Illinois Credit Agreement Act allows affirmative defenses that rely on oral promises that contradict the written terms of the agreement 
D)  dismissed the case for lack of written evidence of an existing contract 
E)  dismissed the case due to improper filing of court documents

Question 12

Billy wants to borrow $10,000 to start a male belly dancing business. Creditors are not anxious to lend him the funds. Billy convinces Gary to back-up the credit he gets from a bank. On the loan, Billy is:

Accepted Answer

A)  the principal 
B)  the grantor 
C)  the sorrier 
D)  the surety 
E)  the guarantor 
A)  the principal 
B)  the grantor 
C)  the sorrier 
D)  the surety 
E)  the guarantor

Question 13

A revolving account requires the debtor to pay in full within a fixed time period.

Accepted Answer

A) True 
 B)False

Question 14

A guarantor is generally the same as:

Accepted Answer

A)  the principal 
B)  the debtor 
C)  the testator 
D)  the grantor 
E)  none of the other choices 
A)  the principal 
B)  the debtor 
C)  the testator 
D)  the grantor 
E)  none of the other choices

Question 15

A business is a ____when it has the ability to take some of the nonpaying customers' property to satisfy the debt.

Accepted Answer

A)  general creditor 
B)  financed creditor 
C)  collateral creditor 
D)  real creditor 
E)  none of the other choices are correct 
A)  general creditor 
B)  financed creditor 
C)  collateral creditor 
D)  real creditor 
E)  none of the other choices are correct

Question 16

A bank is the maker of a certificate of deposit.

Accepted Answer

A) True 
 B)False

Question 17

A(n) ____ is a legally binding written order to pay a fixed sum of money that involves three parties.

Accepted Answer

A)  promissory note 
B)  real estate mortgage note 
C)  draft 
D)  easement 
E)  balloon note 
A)  promissory note 
B)  real estate mortgage note 
C)  draft 
D)  easement 
E)  balloon note

Question 18

Governments disfavor bearer instruments because:

Accepted Answer

A)  transactions with bearer instruments are not taxable 
B)  transactions with bearer instruments are illegal 
C)  transactions involving bearer instruments are not covered by the UCC 
D)  bearer instruments cannot be used to fund political campaigns 
E)  none of the other choices are correct 
A)  transactions with bearer instruments are not taxable 
B)  transactions with bearer instruments are illegal 
C)  transactions involving bearer instruments are not covered by the UCC 
D)  bearer instruments cannot be used to fund political campaigns 
E)  none of the other choices are correct

Question 19

Refer to Fact Pattern 12-1. When Fidelity was deciding whether or not to lend Gena money, which of the following resources could it have possibly used?

Accepted Answer

A)  a pasta maker's trade association, if Gena was a member 
B)  Gena's financial statements 
C)  records of her transactions with other banks 
D)  reports from credit agencies 
E)  any or all of these 
A)  a pasta maker's trade association, if Gena was a member 
B)  Gena's financial statements 
C)  records of her transactions with other banks 
D)  reports from credit agencies 
E)  any or all of these

Question 20

A check must have ____ as its drawee.

Accepted Answer

A)  a court 
B)  an individual 
C)  a corporation 
D)  a bank 
E)  none of the other choices are correct 
A)  a court 
B)  an individual 
C)  a corporation 
D)  a bank 
E)  none of the other choices are correct

Exam 13: Negotiable Instruments, Credit, and Bankruptcy

To attach a security interest, the agreement must be signed by the debtor.

The sale of stock in the company or the sale of negotiable instruments that are subject to securities regulation is known as:

Once a bankruptcy is finished, bankrupts are relieved of paying all debts.

If a negotiable instrument is assigned, the assignee has:

A(n) ____ is a statutory procedure under which a creditor gains the right to attach up to 25 percent of a customer's net wages to be applied to an outstanding debt.

A financial institution that receives a promissory note has the right to:

The most common bankruptcy proceeding is known as adjustment of debt.

A(n) ____ is a legally binding written order to pay a fixed sum of money that involves three parties.

When a company gives credit to a customer, it may create which of the following?

When personal property is used as collateral to back up a loan, the note created is a:

In General Electric Business Financial Services v. Silverman, where Silverman failed to repay a loan from GE Financial after his company went bankrupt, despite having signed a guarantee to repay the loan even if the company went bankrupt, the district court:

Billy wants to borrow $10,000 to start a male belly dancing business. Creditors are not anxious to lend him the funds. Billy convinces Gary to back-up the credit he gets from a bank. On the loan, Billy is:

A revolving account requires the debtor to pay in full within a fixed time period.

A guarantor is generally the same as:

A business is a ____when it has the ability to take some of the nonpaying customers' property to satisfy the debt.

A bank is the maker of a certificate of deposit.

A(n) ____ is a legally binding written order to pay a fixed sum of money that involves three parties.

Governments disfavor bearer instruments because:

Refer to Fact Pattern 12-1. When Fidelity was deciding whether or not to lend Gena money, which of the following resources could it have possibly used?

A check must have ____ as its drawee.

Todays Business Environment: Law and Ethics

The Court Systems

Trials and Resolving Disputes

The Constitution: Focus on Application to Business

Criminal Law and Business

Elements of Torts

Business Torts and Product Liability

Real and Personal Property

Intellectual Property

Contracts

Domestic and International Sales

Business Organizations

Agency and the Employment Relationship

Employment and Labor Regulations

Employment Discrimination

The Regulatory Process

Securities Regulation

Consumer Protection

Antitrust Law

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