Question 1

The debtor in a secured transaction is in most cases the owner of the collateral.

Accepted Answer

A) True 
 B)False

Question 2

Steve is known for buying everything on credit.He typically has a dozen regular monthly payments on installment debt.He might have couch payments,mattress payments,stereo payments,and coffeemaker payments all at the same time.He sells his dining room table and chairs to Bob,a friend of his.A couple of months later,the furniture company from whom Steve bought the table shows up at Bob's house to repossess the table because Steve has stopped making payments on the debt he incurred in purchasing the table.The furniture store claims it is entitled to the table because it was automatically perfected in the purchase money security interest,which Steve granted in purchasing the table.How would this case turn out?

Accepted Answer

Bob takes the table free of the purchase

Question 3

A filed financing statement remains in force for a period of:

Accepted Answer

A)  5 years from the date of filing 
B)  4 years from the date of filing 
C)  6 months from the date of filing 
D)  90 days from the date of filing 
A)  5 years from the date of filing 
B)  4 years from the date of filing 
C)  6 months from the date of filing 
D)  90 days from the date of filing

Question 4

What can a lender do to make sure it remains adequately protected when it has a floating lien? What types of collateral are appropriate for a floating lien?

Accepted Answer

The lender would need to monitor the lev

Question 5

A three-party secured transaction happens when a seller sells goods to a buyer who has obtained financing from a third-party lender that takes a security interest in the goods sold.

Accepted Answer

A) True 
 B)False

Question 6

What is the underlying purpose to having separate requirements for attachment and perfection?

Accepted Answer

Attachment and perfection are two differ

Question 7

The debtor must have a current or future legal right in or the right to possession of the collateral.

Accepted Answer

A) True 
 B)False

Question 8

A security agreement cannot cover after-acquired property of the debtor.

Accepted Answer

A) True 
 B)False

Question 9

Secured transactions usually involve:

Accepted Answer

A)  one or two parties 
B)  one,two,or three parties 
C)  two or three parties 
D)  two,three,or four parties 
E)  one,two,three,or four parties 
A)  one or two parties 
B)  one,two,or three parties 
C)  two or three parties 
D)  two,three,or four parties 
E)  one,two,three,or four parties

Question 10

A creditor who has repossessed collateral may choose to retain it:

Accepted Answer

A)  in all circumstances 
B)  in all circumstances unless the secured party receives an appropriate notice within 20 days 
C)  in all circumstances when the debtor willfully did not pay the debt 
D)  in all circumstances unless the secured party receives an appropriate notice within 20 days or in the case of consumer goods,if more than 60 percent of the price has been paid 
A)  in all circumstances 
B)  in all circumstances unless the secured party receives an appropriate notice within 20 days 
C)  in all circumstances when the debtor willfully did not pay the debt 
D)  in all circumstances unless the secured party receives an appropriate notice within 20 days or in the case of consumer goods,if more than 60 percent of the price has been paid

Question 11

A security interest must be in writing unless the creditor has possession of the collateral.

Accepted Answer

A) True 
 B)False

Question 12

Under no circumstance may a secured creditor repossess and retain the debtor's collateral in satisfaction of the debtor's obligation.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is true?

Accepted Answer

A)  The creditor is generally not entitled to obtain a deficiency judgment where the collateral is goods if the sale of the goods does not cover the amount owed on the underlying debt. 
B)  The right of redemption for collateral extends until a reasonable time after its disposal. 
C)  To exercise the right of redemption,the debtor must not only pay the amount owed,but also all related costs of the creditor in connection with the repossession of the collateral. 
D)  Deficiency judgments are generally against public policy unless reasonable in amount. 
A)  The creditor is generally not entitled to obtain a deficiency judgment where the collateral is goods if the sale of the goods does not cover the amount owed on the underlying debt. 
B)  The right of redemption for collateral extends until a reasonable time after its disposal. 
C)  To exercise the right of redemption,the debtor must not only pay the amount owed,but also all related costs of the creditor in connection with the repossession of the collateral. 
D)  Deficiency judgments are generally against public policy unless reasonable in amount.

Question 14

Sam went to Stable National Bank,borrowed $1,000,and granted a security interest in his sailboat to the bank.This security interest attached on March 1 and was perfected when the bank filed a financing statement on May 15.On April 12,Sam went to Solid National Bank,borrowed $2,000,and granted a security interest on the same sailboat.Solid perfected its security interest by filing a financing statement on April 20.Sam defaulted on both loans in June,having paid off none of the principal on either loan.Both banks want to repossess the boat.If the boat can be sold for $1,200,how much of the $1,200 would each bank be entitled to receive?

Accepted Answer

A)  Stable: $1,000; Solid: $0 
B)  Stable: $1,000; Solid: $200 
C)  Stable: $400; Solid: $800 
D)  Stable: $0; Solid: $800 
E)  Stable: $0; Solid: $1,200 
A)  Stable: $1,000; Solid: $0 
B)  Stable: $1,000; Solid: $200 
C)  Stable: $400; Solid: $800 
D)  Stable: $0; Solid: $800 
E)  Stable: $0; Solid: $1,200

Question 15

The secured party in a secured transaction is usually a lender.

Accepted Answer

A) True 
 B)False

Question 16

When filing is required to perfect a security agreement,the security agreement must be filed.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following elements must exist for there to be a valid,enforceable security agreement?

Accepted Answer

A)  a written security agreement 
B)  the creditor must give value to the debtor 
C)  the debtor must have an interest in the collateral 
D)  A,B,and C 
E)  B and C only 
A)  a written security agreement 
B)  the creditor must give value to the debtor 
C)  the debtor must have an interest in the collateral 
D)  A,B,and C 
E)  B and C only

Question 18

Once a secured consumer debt is paid,the secured party must file a termination statement.

Accepted Answer

A) True 
 B)False

Question 19

When the creditor repossesses the collateral,the creditor always retains the right to keep the collateral rather than sell it to satisfy the debt.

Accepted Answer

A) True 
 B)False

Question 20

JKL,Inc.operates a retail appliance store.JKL borrows $100,000 from First Bank,giving the bank a security interest in all of its current and after-acquired inventory.The bank properly perfects its security interest.Later,JKL buys some additional inventory from Wholesalers,Inc.JKL cannot pay for the inventory purchase,so it gives Wholesalers a security interest in this inventory.Wholesalers perfects its security interest.JKL defaults on both these loans.Assuming any notice required is properly and timely given,who has priority in this after-acquired inventory?

Accepted Answer

A)  First Bank has priority,because it was first to attach. 
B)  First Bank has priority,because it was first to perfect. 
C)  Wholesalers has priority,because this was after-acquired inventory. 
D)  Wholesalers has priority,because this was a purchase money security interest. 
A)  First Bank has priority,because it was first to attach. 
B)  First Bank has priority,because it was first to perfect. 
C)  Wholesalers has priority,because this was after-acquired inventory. 
D)  Wholesalers has priority,because this was a purchase money security interest.

Exam 27: Secured Transactions and Electronic Filing

The debtor in a secured transaction is in most cases the owner of the collateral.

A filed financing statement remains in force for a period of:

What can a lender do to make sure it remains adequately protected when it has a floating lien? What types of collateral are appropriate for a floating lien?

A three-party secured transaction happens when a seller sells goods to a buyer who has obtained financing from a third-party lender that takes a security interest in the goods sold.

What is the underlying purpose to having separate requirements for attachment and perfection?

The debtor must have a current or future legal right in or the right to possession of the collateral.

A security agreement cannot cover after-acquired property of the debtor.

Secured transactions usually involve:

A creditor who has repossessed collateral may choose to retain it:

A security interest must be in writing unless the creditor has possession of the collateral.

Under no circumstance may a secured creditor repossess and retain the debtor's collateral in satisfaction of the debtor's obligation.

Which of the following is true?

The secured party in a secured transaction is usually a lender.

When filing is required to perfect a security agreement,the security agreement must be filed.

Which of the following elements must exist for there to be a valid,enforceable security agreement?

Once a secured consumer debt is paid,the secured party must file a termination statement.

When the creditor repossesses the collateral,the creditor always retains the right to keep the collateral rather than sell it to satisfy the debt.

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