Question 1

A security agreement refers to a written document signed by a debtor that creates a security interest in personal property.

Accepted Answer

A) True 
 B)False

Question 2

Explain foreclosure sale with an example.

Accepted Answer

A debtor's default may trigger a legal c

Question 3

Financing statement refers to a document filed by a secured party that ends a secured interest because the debt has been paid.

Accepted Answer

A) True 
 B)False

Question 4

The Revised Article 9 of the Uniform Commercial Code governs unsecured transactions in personal property.

Accepted Answer

A) True 
 B)False

Question 5

Greg approaches a local dealer to buy a new car which costs $10,000.He wishes to seek finance to buy the car.The auto dealer asks for a co-signer as surety to sell the car on credit.Greg approaches his friend Claire to co-sign on the agreement.Claire agrees and becomes a surety for Greg's car.Which of the following is true in this case?

Accepted Answer

A)  Claire is primarily liable for the payment. 
B)  Claire is secondarily liable for the payment. 
C)  Claire is liable only if the auto dealer has exhausted all other remedies. 
D)  Claire is not liable for the payment. 
A)  Claire is primarily liable for the payment. 
B)  Claire is secondarily liable for the payment. 
C)  Claire is liable only if the auto dealer has exhausted all other remedies. 
D)  Claire is not liable for the payment.

Question 6

The ________ prohibits deficiency judgments regarding certain types of mortgages,such as those on residential property.

Accepted Answer

A)  foreclosure statute 
B)  mortgage statute 
C)  recording statute 
D)  antideficiency statute 
A)  foreclosure statute 
B)  mortgage statute 
C)  recording statute 
D)  antideficiency statute

Question 7

A(n)________ is an arrangement in which a third party promises to be secondarily liable for the payment of another's debt.

Accepted Answer

A)  insolvency arrangement 
B)  surety arrangement 
C)  guaranty arrangement 
D)  accommodation 
A)  insolvency arrangement 
B)  surety arrangement 
C)  guaranty arrangement 
D)  accommodation

Question 8

The ________ requires a mortgage or deed of trust to be documented in the county recorder's office of the county in which the real property is located.

Accepted Answer

A)  recording statute 
B)  real property statute 
C)  mortgage statute 
D)  compilation statute 
A)  recording statute 
B)  real property statute 
C)  mortgage statute 
D)  compilation statute

Question 9

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)  two-party unsecured 
D)  three-party unsecured 
A)  two-party secured 
B)  three-party secured 
C)  two-party unsecured 
D)  three-party unsecured

Question 10

Which of the following is true of disposition of collateral?

Accepted Answer

A)  Disposition of collateral must be a public proceeding. 
B)  The debtor is entitled to receive any surplus collateral that remains after disposition. 
C)  The debtor need not be notified of the disposition as the creditor has complete claim on the collateral. 
D)  Disposition of collateral occurs when the default is by the creditor. 
A)  Disposition of collateral must be a public proceeding. 
B)  The debtor is entitled to receive any surplus collateral that remains after disposition. 
C)  The debtor need not be notified of the disposition as the creditor has complete claim on the collateral. 
D)  Disposition of collateral occurs when the default is by the creditor.

Question 11

In guaranty arrangements,the guarantor is obligated to pay only if the debtor defaults.

Accepted Answer

A) True 
 B)False

Question 12

Credit that requires collateral that protects payment of the loan is referred to as ________.

Accepted Answer

A)  revolving credit 
B)  secured credit 
C)  equal credit 
D)  fair credit 
A)  revolving credit 
B)  secured credit 
C)  equal credit 
D)  fair credit

Question 13

A writ of execution is a prejudgment court order that permits the seizure of a debtor's property that is in possession of third parties.

Accepted Answer

A) True 
 B)False

Question 14

Secured credit does not require any collateral from the debtor to minimize the risk.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is true of the right of redemption for mortgages?

Accepted Answer

A)  The mortgagor has to pay the full amount of the debt incurred by the mortgagee. 
B)  The title of possession is passed on to the mortgagee upon completion of redemption. 
C)  The mortgagee is allowed to pay back partial interest until the statutory period of redemption. 
D)  The amount payable by the mortgagor is free of interest charges and other charges. 
A)  The mortgagor has to pay the full amount of the debt incurred by the mortgagee. 
B)  The title of possession is passed on to the mortgagee upon completion of redemption. 
C)  The mortgagee is allowed to pay back partial interest until the statutory period of redemption. 
D)  The amount payable by the mortgagor is free of interest charges and other charges.

Question 16

________ is a situation in which the creditor does not have to file a financing statement or take possession of the goods to perfect his or her security interest.

Accepted Answer

A)  Perfection by possession of collateral 
B)  Perfection by attachment 
C)  Perfection by claim 
D)  Perfection without statement 
A)  Perfection by possession of collateral 
B)  Perfection by attachment 
C)  Perfection by claim 
D)  Perfection without statement

Question 17

Floating lien refers to a security interest in property that was possessed by the debtor when the security agreement was executed.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following refers to the resulting assets from the exchange or disposal of collateral subject to a security agreement?

Accepted Answer

A)  sale proceeds 
B)  future advances 
C)  floating lien 
D)  after-acquired property 
A)  sale proceeds 
B)  future advances 
C)  floating lien 
D)  after-acquired property

Question 19

Which of the following is true of a guarantor in a guaranty arrangement?

Accepted Answer

A)  The guarantor is secondarily liable to the principal debtor's debt when it is due. 
B)  The guarantor can be approached even if the principal debtor is not in default. 
C)  The creditor can seek first remedy from a guarantor. 
D)  The guarantor has full legal rights to possession of the real property in this type of arrangement. 
A)  The guarantor is secondarily liable to the principal debtor's debt when it is due. 
B)  The guarantor can be approached even if the principal debtor is not in default. 
C)  The creditor can seek first remedy from a guarantor. 
D)  The guarantor has full legal rights to possession of the real property in this type of arrangement.

Question 20

The right to redemption allows mortgagors to pay partial interest on the mortgage amount after default.

Accepted Answer

A) True 
 B)False

Exam 23: Credit, Real Property Financing, and Secured Transactions

A security agreement refers to a written document signed by a debtor that creates a security interest in personal property.

Explain foreclosure sale with an example.

Financing statement refers to a document filed by a secured party that ends a secured interest because the debt has been paid.

The Revised Article 9 of the Uniform Commercial Code governs unsecured transactions in personal property.

The ________ prohibits deficiency judgments regarding certain types of mortgages,such as those on residential property.

A(n)________ is an arrangement in which a third party promises to be secondarily liable for the payment of another's debt.

The ________ requires a mortgage or deed of trust to be documented in the county recorder's office of the county in which the real property is located.

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

Which of the following is true of disposition of collateral?

In guaranty arrangements,the guarantor is obligated to pay only if the debtor defaults.

Credit that requires collateral that protects payment of the loan is referred to as ________.

A writ of execution is a prejudgment court order that permits the seizure of a debtor's property that is in possession of third parties.

Secured credit does not require any collateral from the debtor to minimize the risk.

Which of the following is true of the right of redemption for mortgages?

________ is a situation in which the creditor does not have to file a financing statement or take possession of the goods to perfect his or her security interest.

Floating lien refers to a security interest in property that was possessed by the debtor when the security agreement was executed.

Which of the following refers to the resulting assets from the exchange or disposal of collateral subject to a security agreement?

Which of the following is true of a guarantor in a guaranty arrangement?

The right to redemption allows mortgagors to pay partial interest on the mortgage amount after default.

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