Question 1

The UCC requires that a precise form be followed in order to create a security interest.

Accepted Answer

A) True 
 B)False

Question 2

The __________ interest rate is based on the cost of borrowing offshore U.S.dollars in the global interbank market.

Accepted Answer

A)  International Rate Exchange 
B)  Frankfurt International Trade Rate 
C)  London Interbank Offered Rate 
D)  New York Exchange Rate 
A)  International Rate Exchange 
B)  Frankfurt International Trade Rate 
C)  London Interbank Offered Rate 
D)  New York Exchange Rate

Question 3

Several commentators have criticized the bankruptcy code as too easily excusing individuals and businesses from honoring their lawful obligations.From a societal standpoint,do you believe that the bankruptcy code plays a positive role in social and economic relationships? What changes,if any,would you recommend?

Accepted Answer

Students'

Question 4

A guaranty that covers all future obligations of the primary debtor to a lender is referred to as a __________ guaranty.

Accepted Answer

A)  continuing 
B)  restricted 
C)  primary 
D)  performance 
A)  continuing 
B)  restricted 
C)  primary 
D)  performance

Question 5

Chapter 13 does not provide a bankruptcy discharge for corporations.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is the most common expression of a floating interest rate?

Accepted Answer

A)  The sum of the prime rate and a specified number of percentage points 
B)  A percentage of the prime rate 
C)  Spread 
D)  LIBOR 
A)  The sum of the prime rate and a specified number of percentage points 
B)  A percentage of the prime rate 
C)  Spread 
D)  LIBOR

Question 7

What five events referenced in the text usually constitute a default?

Accepted Answer

Events of default usually include (1)fai

Question 8

An equipment lease that serves the purpose of financing is known as a(n)__________ lease.

Accepted Answer

A)  finance 
B)  temporary 
C)  lending 
D)  debtor's 
A)  finance 
B)  temporary 
C)  lending 
D)  debtor's

Question 9

When the debtor fails to make a payment when due,the guarantor's obligation to pay the lender is triggered automatically under the guaranty of:

Accepted Answer

A)  security. 
B)  collection. 
C)  payment. 
D)  performance. 
A)  security. 
B)  collection. 
C)  payment. 
D)  performance.

Question 10

What is required in a filing for a voluntary petition in bankruptcy? An involuntary petition?

Accepted Answer

A voluntary petition must be signed and

Question 11

Commercial paper is a term that describes short-term corporate indebtedness.

Accepted Answer

A) True 
 B)False

Question 12

An equipment lease that serves the purpose of financing is known as a(n)__________ lease.

Accepted Answer

A)  credit 
B)  finance 
C)  interminable 
D)  revocable 
A)  credit 
B)  finance 
C)  interminable 
D)  revocable

Question 13

A Chapter 7 discharge is not available to a debtor who has received a discharge in a bankruptcy filed in the preceding __________ years or in a Chapter 13 case filed in the preceding __________ years.

Accepted Answer

A)  two; four 
B)  six; seven 
C)  eight; six 
D)  seven; six 
A)  two; four 
B)  six; seven 
C)  eight; six 
D)  seven; six

Question 14

In order to reflect the greater risk to the lender,secured loans are priced at a higher rate than unsecured loans.

Accepted Answer

A) True 
 B)False

Question 15

__________ a security interest involves making it valid as against other creditors of the debtor.

Accepted Answer

A)  Finalizing 
B)  Perfecting 
C)  Organizing 
D)  Signing 
A)  Finalizing 
B)  Perfecting 
C)  Organizing 
D)  Signing

Question 16

One popular method in Chapter 11 cases is called a(n)__________ bankruptcy,in which the company solicits votes on its plan of reorganization prior to filing bankruptcy.

Accepted Answer

A)  prepackaged 
B)  cramdown 
C)  workout 
D)  confirmation 
A)  prepackaged 
B)  cramdown 
C)  workout 
D)  confirmation

Question 17

While state restrictions may apply,there are no federal restrictions on lenders and borrowers entering into transactions whereby secured credit will be sued to acquire stock.

Accepted Answer

A) True 
 B)False

Question 18

A debtor does not have to show it is insolvent to file for bankruptcy.

Accepted Answer

A) True 
 B)False

Question 19

A purchase money security interest in consumer goods is an automatically perfected security interest.

Accepted Answer

A) True 
 B)False

Question 20

What is the primary purpose of debt subordination?

Accepted Answer

A)  To cap homestead exemptions in limited circumstances 
B)  To prevent intentional infliction of emotional distress on a borrower by bank officials 
C)  To protect the senior creditor in the event the debtor becomes insolvent 
D)  To make the guarantor's assets unavailable to its creditors 
A)  To cap homestead exemptions in limited circumstances 
B)  To prevent intentional infliction of emotional distress on a borrower by bank officials 
C)  To protect the senior creditor in the event the debtor becomes insolvent 
D)  To make the guarantor's assets unavailable to its creditors

Exam 23: Debtor Creditor Relations And Bankruptcy

The UCC requires that a precise form be followed in order to create a security interest.

The __________ interest rate is based on the cost of borrowing offshore U.S.dollars in the global interbank market.

A guaranty that covers all future obligations of the primary debtor to a lender is referred to as a __________ guaranty.

Chapter 13 does not provide a bankruptcy discharge for corporations.

Which of the following is the most common expression of a floating interest rate?

What five events referenced in the text usually constitute a default?

An equipment lease that serves the purpose of financing is known as a(n)__________ lease.

When the debtor fails to make a payment when due,the guarantor's obligation to pay the lender is triggered automatically under the guaranty of:

What is required in a filing for a voluntary petition in bankruptcy? An involuntary petition?

Commercial paper is a term that describes short-term corporate indebtedness.

An equipment lease that serves the purpose of financing is known as a(n)__________ lease.

A Chapter 7 discharge is not available to a debtor who has received a discharge in a bankruptcy filed in the preceding __________ years or in a Chapter 13 case filed in the preceding __________ years.

In order to reflect the greater risk to the lender,secured loans are priced at a higher rate than unsecured loans.

__________ a security interest involves making it valid as against other creditors of the debtor.

One popular method in Chapter 11 cases is called a(n)__________ bankruptcy,in which the company solicits votes on its plan of reorganization prior to filing bankruptcy.

While state restrictions may apply,there are no federal restrictions on lenders and borrowers entering into transactions whereby secured credit will be sued to acquire stock.

A debtor does not have to show it is insolvent to file for bankruptcy.

A purchase money security interest in consumer goods is an automatically perfected security interest.

What is the primary purpose of debt subordination?

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A Chapter 7 discharge is not available to a debtor who has received a discharge in a bankruptcy filed in the preceding years or in a Chapter 13 case filed in the preceding years.