Question 1

Which of the following is true of the priority of claims?

Accepted Answer

A)  If two or more secured parties claim an interest in the same collateral but only one has perfected his or her security interest, the perfected security interest has priority. 
B)  Although one of the parties to claim an interest in the collateral has perfected his or her security interest, all the parties are given fair and equal priority. 
C)  If two or more secured parties claim an interest in the same collateral but neither has a perfected claim, they are given equal priority irrespective of attachments. 
D)  If two or more secured parties claim an interest in the same collateral but neither has a perfected claim, the first to claim has priority. 
A)  If two or more secured parties claim an interest in the same collateral but only one has perfected his or her security interest, the perfected security interest has priority. 
B)  Although one of the parties to claim an interest in the collateral has perfected his or her security interest, all the parties are given fair and equal priority. 
C)  If two or more secured parties claim an interest in the same collateral but neither has a perfected claim, they are given equal priority irrespective of attachments. 
D)  If two or more secured parties claim an interest in the same collateral but neither has a perfected claim, the first to claim has priority.

Question 2

Gregory borrows $200,000 from Mountain Bank to purchase a plot of land, and Mountain Bank perfects its security interest. Gregory defaults on the loan, and owes an outstanding balance of $80,000. His house has gone down in value to $160,000 at the time of default, but he has other personal assets to satisfy the debt. Which of the following is a course of action for Mountain Bank to recover the debt after foreclosing on the loan?

Accepted Answer

A)  proceed to judgment against Gregory 
B)  file a financing statement 
C)  release a termination statement 
D)  proceed to repossess the collateral 
A)  proceed to judgment against Gregory 
B)  file a financing statement 
C)  release a termination statement 
D)  proceed to repossess the collateral

Question 3

________ is a situation in which a creditor agrees to extend credit only if the purchaser pledges some personal property as collateral for the loan.

Accepted Answer

A)  Floating lien 
B)  Attachment 
C)  Mortgage 
D)  Secured credit 
A)  Floating lien 
B)  Attachment 
C)  Mortgage 
D)  Secured credit

Question 4

Which of the following is true of financing statements?

Accepted Answer

A)  They cannot be electronically filed. 
B)  They are effective for one year from the date of filing. 
C)  They cannot be extended once they expire. 
D)  They are available for review by the public. 
A)  They cannot be electronically filed. 
B)  They are effective for one year from the date of filing. 
C)  They cannot be extended once they expire. 
D)  They are available for review by the public.

Question 5

A financing statement refers to a document filed by a secured creditor with the appropriate government office that constructively notifies the world of his or her security interest in personal property.

Accepted Answer

A) True 
 B)False

Question 6

A two-party secured transaction occurs when a seller sells goods to a buyer on credit and retains a security interest in the goods.

Accepted Answer

A) True 
 B)False

Question 7

When a creditor extends credit to a debtor and takes a security interest in some personal property of the debtor, it is called a ________.

Accepted Answer

A)  super-priority lien 
B)  collateral claim 
C)  collateral disposition 
D)  secured transaction 
A)  super-priority lien 
B)  collateral claim 
C)  collateral disposition 
D)  secured transaction

Question 8

Security interest is the rate of interest per annum which is entitled to the party that secures payment or performance of an obligation.

Accepted Answer

A) True 
 B)False

Question 9

Darrel, Smith, Keith, and Aaron are claimants to a collateral interest. Smith and Darrel secure their interests. Aaron takes physical possession of the collateral. Keith files a financing statement some time later. Who among the four will have highest priority of claim to the collateral?

Accepted Answer

A)  Darrel 
B)  Smith 
C)  Keith 
D)  Aaron 
A)  Darrel 
B)  Smith 
C)  Keith 
D)  Aaron

Question 10

Which of the following is considered intangible personal property?

Accepted Answer

A)  vehicles 
B)  equipment 
C)  accessions 
D)  deposit accounts 
A)  vehicles 
B)  equipment 
C)  accessions 
D)  deposit accounts

Question 11

Which article of the Uniform Commercial Code governs secured transactions in personal property?

Accepted Answer

A)  Article 8 
B)  Article 9 
C)  Article 18 
D)  Article 19 
A)  Article 8 
B)  Article 9 
C)  Article 18 
D)  Article 19

Question 12

Chattel paper is considered tangible personal property.

Accepted Answer

A) True 
 B)False

Question 13

Marcia buys a $3,000 high-definition plasma television for her home on credit extended by the seller, Better Buy. Better Buy requires Marcia to sign a security agreement. Better Buy has a ________ interest in the television that is automatically perfected at the time of the credit sale.

Accepted Answer

A)  cumulative security 
B)  future advance monetary 
C)  default 
D)  purchase money security 
A)  cumulative security 
B)  future advance monetary 
C)  default 
D)  purchase money security

Question 14

Which of the following transactions occurs when a seller sells goods to a buyer on credit and retains a security interest in the goods?

Accepted Answer

A)  two-party secured 
B)  three-party secured 
C)  perfected 
D)  attached 
A)  two-party secured 
B)  three-party secured 
C)  perfected 
D)  attached

Question 15

Perfection by investment of collateral is one of the methods of perfecting a security interest under the UCC.

Accepted Answer

A) True 
 B)False

Question 16

In a three-party secured transaction, the party that purchases the goods or services is known as the buyer-secured creditor.

Accepted Answer

A) True 
 B)False

Question 17

Intangible personal property cannot be used as collateral for a security agreement.

Accepted Answer

A) True 
 B)False

Question 18

John buys a new car with the help of a loan. He permits the creditor to take possession of the car if he cannot repay the loan in time. Here, the car is the ________.

Accepted Answer

A)  after-acquired property 
B)  collateral 
C)  intangible personal property 
D)  floating lien 
A)  after-acquired property 
B)  collateral 
C)  intangible personal property 
D)  floating lien

Question 19

Article 9 of the Uniform Commercial Code (UCC) governs transactions secured by tangible or intangible personal property.

Accepted Answer

A) True 
 B)False

Question 20

What is a secured transaction?

Accepted Answer

Most lenders take a security interest in

Exam 27: Secured Transactions

Which of the following is true of the priority of claims?

________ is a situation in which a creditor agrees to extend credit only if the purchaser pledges some personal property as collateral for the loan.

Which of the following is true of financing statements?

A financing statement refers to a document filed by a secured creditor with the appropriate government office that constructively notifies the world of his or her security interest in personal property.

A two-party secured transaction occurs when a seller sells goods to a buyer on credit and retains a security interest in the goods.

When a creditor extends credit to a debtor and takes a security interest in some personal property of the debtor, it is called a ________.

Security interest is the rate of interest per annum which is entitled to the party that secures payment or performance of an obligation.

Darrel, Smith, Keith, and Aaron are claimants to a collateral interest. Smith and Darrel secure their interests. Aaron takes physical possession of the collateral. Keith files a financing statement some time later. Who among the four will have highest priority of claim to the collateral?

Which of the following is considered intangible personal property?

Which article of the Uniform Commercial Code governs secured transactions in personal property?

Chattel paper is considered tangible personal property.

Marcia buys a $3,000 high-definition plasma television for her home on credit extended by the seller, Better Buy. Better Buy requires Marcia to sign a security agreement. Better Buy has a ________ interest in the television that is automatically perfected at the time of the credit sale.

Which of the following transactions occurs when a seller sells goods to a buyer on credit and retains a security interest in the goods?

Perfection by investment of collateral is one of the methods of perfecting a security interest under the UCC.

In a three-party secured transaction, the party that purchases the goods or services is known as the buyer-secured creditor.

Intangible personal property cannot be used as collateral for a security agreement.

John buys a new car with the help of a loan. He permits the creditor to take possession of the car if he cannot repay the loan in time. Here, the car is the ________.

Article 9 of the Uniform Commercial Code (UCC) governs transactions secured by tangible or intangible personal property.

What is a secured transaction?

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