Question 1

A purchase-money security interest in a business's inventory is perfected automatically at the time of a credit sale.

Accepted Answer

A) True 
 B)False

Question 2

A financing statement cannot be filed electronically.

Accepted Answer

A) True 
 B)False

Question 3

The payment of Laine's debt to Mingo is guaranteed by Laine's personal property. The process by which Mingo can protect himself against the claims of third parties to this property is

Accepted Answer

A)  attachment. 
B)  authentication. 
C)  perfection. 
D)  bankruptcy. 
A)  attachment. 
B)  authentication. 
C)  perfection. 
D)  bankruptcy.

Question 4

Elias repays his debt, incurred to buy consumer goods, to Finance Bank and immediately files a written request for a termination statement. Finance

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 Elias. 
D)  is not required 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 Elias. 
D)  is not required not comply.

Question 5

The payment of Hu's debt to Ian is guaranteed by Hu's personal property. To give public notice of his interest in Hu's property, Ian 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 6

Clear Sky Credit Corporation asks Dimension Games 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)  the first-in, first-out rule. 
B)  a floating lien. 
C)  a violation of most state laws. 
D)  a future advance. 
A)  the first-in, first-out rule. 
B)  a floating lien. 
C)  a violation of most state laws. 
D)  a future advance.

Question 7

A financing statement must be filed under the debtor's trade name.

Accepted Answer

A) True 
 B)False

Question 8

On the debtor's default, a secured party can take possession of the collateral covered by the security agreement only by court order.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

A buyer in the ordinary course of business has priority unless a previously perfected security interest exists as to the goods.

Accepted Answer

A) True 
 B)False

Question 11

A continuation statement will continue the effectiveness of a financing statement for five years.

Accepted Answer

A) True 
 B)False

Question 12

The payment of Yves's debt to Zane is guaranteed by Yves's personal property. Their agreement describes Yves's subject property by serial number. To establish Zane's interest, this is

Accepted Answer

A)  irrelevant. 
B)  not sufficient. 
C)  sufficient if it accurately describes the parties' agreement. 
D)  sufficient unless it is too tedious to review. 
A)  irrelevant. 
B)  not sufficient. 
C)  sufficient if it accurately describes the parties' agreement. 
D)  sufficient unless it is too tedious to review.

Question 13

Hal's Hardware store defaults on a debt to Intrastate Bank, which takes possession of the collateral securing the debt. Intrastate sells the collateral. The proceeds from the sale are applied first to

Accepted Answer

A)  Hal's debt to Intrastate. 
B)  Hal's debts to other creditors. 
C)  Intrastate's fees for the sale. 
D)  payments Hal's made on the debt to Intrastate. 
A)  Hal's debt to Intrastate. 
B)  Hal's debts to other creditors. 
C)  Intrastate's fees for the sale. 
D)  payments Hal's made on the debt to Intrastate.

Question 14

Experienced Capital Company and First Street Bank are secured parties with security interests in property owned by Grande Oil Corporation. Between these security interests, the first to be filed or perfected has priority over other filed or perfected security interests in

Accepted Answer

A)  most circumstances. 
B)  no circumstances. 
C)  states that have not adopted Article 9 of the UCC. 
D)  states that require a security agreement to be signed and dated by the creditor. 
A)  most circumstances. 
B)  no circumstances. 
C)  states that have not adopted Article 9 of the UCC. 
D)  states that require a security agreement to be signed and dated by the creditor.

Question 15

Saf-T Lenders, Inc., takes possession of Tiara's stock in Urgent Care Corporation to perfect Saf-T's security interest in the stock. This is

Accepted Answer

A)  after-acquired property. 
B)  a pledge. 
C)  a purchase-money security interest. 
D)  a violation of most state laws. 
A)  after-acquired property. 
B)  a pledge. 
C)  a purchase-money security interest. 
D)  a violation of most state laws.

Question 16

Mona lives in New Jersey, but she works in New York. Mona borrows $1,000 from National Bank, using her motorcycle as collateral. To perfect its security interest, the bank must file its financing statement in at least

Accepted Answer

A)  every state. 
B)  New Jersey. 
C)  New Jersey and New York. 
D)  New York. 
A)  every state. 
B)  New Jersey. 
C)  New Jersey and New York. 
D)  New York.

Question 17

A security interest is enforceable only if the collateral is in the secured party's possession.

Accepted Answer

A) True 
 B)False

Question 18

Any creditor who has a security interest in a debtor's collateral is the secured party.

Accepted Answer

A) True 
 B)False

Question 19

Efrem owns Fans & Players, a retail sporting goods shop. When Great Hill Lodge, a new ski resort, is built in the area, Efrem decides to expand and borrows a large sum from Hometown Bank. The bank takes a security interest in Efrem's present inventory and any after-acquired inventory as collateral for the loan. The bank properly perfects the security interest by filing a financing statement. Efrem's business is profitable, and he begins doubling his inventory. A year later, an avalanche destroys the ski slope and lodge. Efrem's business takes a turn for the worse, and he defaults on his debt to the bank. The bank seeks possession of his entire inventory, even though the inventory is twice as large as it was when the loan was made. Efrem claims that the bank has rights to only half of his inventory. Is Efrem correct Explain.

Accepted Answer

No. Hometown Bank will prevail because i

Question 20

A security agreement must contain a description of the collateral that reasonably identifies it.

Accepted Answer

A) True 
 B)False

Exam 29: Secured Transactions

A purchase-money security interest in a business's inventory is perfected automatically at the time of a credit sale.

A financing statement cannot be filed electronically.

The payment of Laine's debt to Mingo is guaranteed by Laine's personal property. The process by which Mingo can protect himself against the claims of third parties to this property is

Elias repays his debt, incurred to buy consumer goods, to Finance Bank and immediately files a written request for a termination statement. Finance

The payment of Hu's debt to Ian is guaranteed by Hu's personal property. To give public notice of his interest in Hu's property, Ian is most likely to

Clear Sky Credit Corporation asks Dimension Games Company to agree to a security agreement that provides for coverage of the proceeds from the sale of after-acquired property. This is

A financing statement must be filed under the debtor's trade name.

On the debtor's default, a secured party can take possession of the collateral covered by the security agreement only by court order.

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

A buyer in the ordinary course of business has priority unless a previously perfected security interest exists as to the goods.

A continuation statement will continue the effectiveness of a financing statement for five years.

The payment of Yves's debt to Zane is guaranteed by Yves's personal property. Their agreement describes Yves's subject property by serial number. To establish Zane's interest, this is

Hal's Hardware store defaults on a debt to Intrastate Bank, which takes possession of the collateral securing the debt. Intrastate sells the collateral. The proceeds from the sale are applied first to

Experienced Capital Company and First Street Bank are secured parties with security interests in property owned by Grande Oil Corporation. Between these security interests, the first to be filed or perfected has priority over other filed or perfected security interests in

Saf-T Lenders, Inc., takes possession of Tiara's stock in Urgent Care Corporation to perfect Saf-T's security interest in the stock. This is

Mona lives in New Jersey, but she works in New York. Mona borrows $1,000 from National Bank, using her motorcycle as collateral. To perfect its security interest, the bank must file its financing statement in at least

A security interest is enforceable only if the collateral is in the secured party's possession.

Any creditor who has a security interest in a debtor's collateral is the secured party.

A security agreement must contain a description of the collateral that reasonably identifies it.

Introduction to Law and Legal Reasoning

Courts and Alternative Dispute Resolution

Court Procedures

Constitutional Authority to Regulate Business

Ethics and Business Decision Making

Intentional Torts and Privacy

Negligence and Strict Liability

Intellectual Property and Internet Law

Criminal Law and Cyber Crime

Nature and Terminology

Agreement in Traditional and E-Contracts

Consideration

Capacity and Legality

Mistakes, Fraud, and Voluntary Consent

The Statute of Frauds

Third Party Rights

Performance and Discharge

Breach of Contract and Remedies

The Formation of Sales and Lease Contracts

Title, Risk, and Insurable Interest

Performance Breach of Sales Lease Contracts

Warranties and Product Liability

International Law in a Global Economy

The Function Creation of Negotiable Instruments

Transferability and Holder in Due Course

Liability, Defenses, and Discharge

Checks and Banking in the Digital Age

Creditors Rights and Remedies

Bankruptcy Law

Mortgages Foreclosures After the Recession

Agency Formation and Duties

Agency Liability and Termination

Employment, Immigration, and Labor Law

Employment Discrimination

Sole Proprietorships and Franchises

Partnerships and Limited Liability Partnerships

Limited Liability Companies Special Business Forms

Corporate Formation and Financing

Corporate Directors, Officers, Shareholders

Corporate Merger, Consolidation, Termination

Securities Law Corporate Governance

Law for Small Business

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

Professional Liaility and Accountability

Personal Property and Bailments

Real Property Landlord-Tenant Relationships

Insurance

Wills and Trusts

for Unit One

for Unit Two

for Unit Three

for Unit Four

for Unit Five

for Unit Sex

for Unit Seven

for Unit Eighet

for Unit Nine