Question 1

The creditor is responsible for liquidating all of the debtor's exempt property in bankruptcy proceedings.

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)  equity financing 
B)  debt financing 
C)  credit financing 
D)  bankruptcy 
E)  sale financing

Question 3

Most companies that file Chapter 11 bankruptcies are billion dollar or larger firms.

Accepted Answer

A) True 
 B)False

Question 4

When a customer is unable to meet its repayment obligations the customer defaults.

Accepted Answer

A) True 
 B)False

Question 5

With negotiable instruments, the party to receive payment is the:

Accepted Answer

A)  beneficiary 
B)  drawer 
C)  payer 
D)  drawee 
E)  secondary party

Question 6

In a contract for suretyship the third party who is responsible for the borrower's payment obligations, or performance, to a creditor is known as the:

Accepted Answer

A)  surety 
B)  borrowee 
C)  principal 
D)  lender 
E)  guarantor

Question 7

The debts owed to secured creditors have the greatest protection in bankruptcy proceedings.

Accepted Answer

A) True 
 B)False

Question 8

Although commercial paper may be negotiable or non-negotiable, a dispute could be resolved differently depending on whether the instrument is categorized as negotiable or non-negotiable.

Accepted Answer

A) True 
 B)False

Question 9

Fern TV sells Ryan a 52" plasma television. Ryan does not have the cash necessary to buy the TV, so Fern allows him to make 12 monthly payments. If Ryan misses any payments, Fern may take the TV back. Fern:

Accepted Answer

A)  is an unsecured creditor 
B)  has a security interest 
C)  is a perfected debtor 
D)  is an unsecured creditor with a perfected interest 
E)  none of the other choices

Question 10

A(n) ____ is a note promising to repay borrowed money, probably with interest.

Accepted Answer

A)  negotiable instrument 
B)  negotiable note 
C)  borrowing note 
D)  lending note 
E)  none of the other choices are correct

Question 11

Smaller businesses tend to rely more on equity financing for financial backing.

Accepted Answer

A) True 
 B)False

Question 12

In the case of bankruptcy, which of the following classes of creditors have lowest priority?

Accepted Answer

A)  federal taxes 
B)  costs of preserving and administering the debtor's estate 
C)  secured creditors 
D)  rent claims 
E)  general creditors

Question 13

The draft that requires immediate payment by the drawee to the payee, which is true of a check, is called:

Accepted Answer

A)  a trade acceptance draft 
B)  a bankers' acceptance 
C)  a time draft 
D)  an account receivable 
E)  none of the other choices

Question 14

In a(n) ____, creditors file a petition with the court, forcing the declaration of bankruptcy and the beginning of proceedings.

Accepted Answer

A)  voluntary bankruptcy 
B)  involuntary bankruptcy 
C)  real bankruptcy 
D)  corporate bankruptcy 
E)  realized bankruptcy

Question 15

Bankruptcy proceedings may be voluntary or involuntary.

Accepted Answer

A) True 
 B)False

Question 16

Each year, approximately how many individuals in the U.S. file for bankruptcy?

Accepted Answer

A)  ten thousand 
B)  twenty thousand 
C)  one hundred thousand 
D)  five hundred thousand 
E)  none of the other choices are near the correct number

Question 17

The powers of a debtor in possession are balanced by:

Accepted Answer

A)  the underwriter in charge 
B)  the grievance committee 
C)  the lienor's committee 
D)  the party of rights 
E)  none of the other choices

Question 18

Most companies that file Chapter 11 bankruptcies have assets worth:

Accepted Answer

A)  more than $1 million 
B)  at least $5 million 
C)  more than $1 billion 
D)  more than $5 billion 
E)  none of the other choices are correct

Question 19

To transfer an instrument made "to the order" of the payee, the payee must:

Accepted Answer

A)  endorse, but not deliver the instrument to a third party 
B)  have the instrument rewritten by a district court official 
C)  destroy the original instrument 
D)  create an addendum to the original instrument 
E)  none of the other choices are correct

Question 20

Liquidation takes place though ____ unless otherwise ordered by the court.

Accepted Answer

A)  a sale at a public auction 
B)  eBay 
C)  a private dispersal sale 
D)  an estate sale 
E)  a fixed price auction

Exam 13: Negotiable Instruments, Credit, and Bankruptcy

The creditor is responsible for liquidating all of the debtor's exempt property in bankruptcy proceedings.

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

Most companies that file Chapter 11 bankruptcies are billion dollar or larger firms.

When a customer is unable to meet its repayment obligations the customer defaults.

With negotiable instruments, the party to receive payment is the:

In a contract for suretyship the third party who is responsible for the borrower's payment obligations, or performance, to a creditor is known as the:

The debts owed to secured creditors have the greatest protection in bankruptcy proceedings.

Although commercial paper may be negotiable or non-negotiable, a dispute could be resolved differently depending on whether the instrument is categorized as negotiable or non-negotiable.

Fern TV sells Ryan a 52" plasma television. Ryan does not have the cash necessary to buy the TV, so Fern allows him to make 12 monthly payments. If Ryan misses any payments, Fern may take the TV back. Fern:

A(n) ____ is a note promising to repay borrowed money, probably with interest.

Smaller businesses tend to rely more on equity financing for financial backing.

In the case of bankruptcy, which of the following classes of creditors have lowest priority?

The draft that requires immediate payment by the drawee to the payee, which is true of a check, is called:

In a(n) ____, creditors file a petition with the court, forcing the declaration of bankruptcy and the beginning of proceedings.

Bankruptcy proceedings may be voluntary or involuntary.

Each year, approximately how many individuals in the U.S. file for bankruptcy?

The powers of a debtor in possession are balanced by:

Most companies that file Chapter 11 bankruptcies have assets worth:

To transfer an instrument made "to the order" of the payee, the payee must:

Liquidation takes place though ____ unless otherwise ordered by the court.