Question 1

According to the UCC, which of the following should a financing statement list?

Accepted Answer

A)  The names and addresses of all parties involved only. 
B)  Two items: (1) the names and addresses of all the parties involved and (2) a description of the collateral. 
C)  Three items: (1) the names and addresses of all the parties involved, (2) a description of the collateral, and (3) the signature of the debtor. 
D)  Three items: (1) the name of the financing bank, (2) the name of the debtor, and (3) a description of the collateral. 
E)  Three items: (1) the name of the financing bank, (2) the signature of the debtor, and (3) a description of the collateral. 
A)  The names and addresses of all parties involved only. 
B)  Two items: (1) the names and addresses of all the parties involved and (2) a description of the collateral. 
C)  Three items: (1) the names and addresses of all the parties involved, (2) a description of the collateral, and (3) the signature of the debtor. 
D)  Three items: (1) the name of the financing bank, (2) the name of the debtor, and (3) a description of the collateral. 
E)  Three items: (1) the name of the financing bank, (2) the signature of the debtor, and (3) a description of the collateral.

Question 2

Explain three advantages described in the text associated with perfection by possession.

Accepted Answer

First, a secured party does not have to

Question 3

Which of the following would not be considered collateral?

Accepted Answer

A)  Farm products. 
B)  Equipment. 
C)  Documents of title. 
D)  Proceeds. 
E)  Indispensable paper. 
A)  Farm products. 
B)  Equipment. 
C)  Documents of title. 
D)  Proceeds. 
E)  Indispensable paper.

Question 4

Which of the following is true in regards to a dispute when two parties have given a loan over collateral?

Accepted Answer

A)  The party with the secured interest will have priority in repossessing the collateral over the party with the unsecured interest. 
B)  Both parties will be able to claim an interest in the collateral and a court will allocate the percentage owed to both. 
C)  The first to file a lawsuit is the one who receives the collateral. 
D)  The first to physically reposse the collateral will be the winning party. 
E)  The banks will assess allocation between themselves based on who was the first to secure the loan on the collateral. 
A)  The party with the secured interest will have priority in repossessing the collateral over the party with the unsecured interest. 
B)  Both parties will be able to claim an interest in the collateral and a court will allocate the percentage owed to both. 
C)  The first to file a lawsuit is the one who receives the collateral. 
D)  The first to physically reposse the collateral will be the winning party. 
E)  The banks will assess allocation between themselves based on who was the first to secure the loan on the collateral.

Question 5

The party that perfects its interest in collateral has first claim, when two parties have an interest in the same collateral.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is the term associated with a creditor becoming the secured party who has a security interest in the collateral when this event happens?

Accepted Answer

A)  Attachment. 
B)  Transformation. 
C)  Perfecting. 
D)  Reformation. 
E)  Protecting. 
A)  Attachment. 
B)  Transformation. 
C)  Perfecting. 
D)  Reformation. 
E)  Protecting.

Question 7

On January 1, Yuka purchases a pickup truck in Arizona and the car dealership properly perfects its security interest in the truck. On February 1, Yuka moves to Colorado and takes out a loan with Rocky Bank to start an internet business, using the truck as collateral. Rocky Bank properly perfects its security interest in the truck. Yuka never opens her business, stops making payments on the truck, and leaves town on December 31. Which creditor's security interest has priority?

Accepted Answer

A)  The dealership, because it properly perfected its security interest before Rocky Bank. 
B)  The dealership, because even though it did not re-perfect its interest in Colorado, a secured party does not lose protection if the initial perfection was proper. 
C)  The dealership, because it properly perfected its security interest, which automatically perfected when Yuka moved to Colorado. 
D)  Rocky Bank, because, although the dealership properly perfected its security interest before Rocky Bank, the dealership failed to re-perfect its interest in the new state. 
E)  Rocky Bank, because even if the dealership had perfected its security interest in Colorado within four months of when the truck was brought into the state, the bank would have priority over a car dealership. 
A)  The dealership, because it properly perfected its security interest before Rocky Bank. 
B)  The dealership, because even though it did not re-perfect its interest in Colorado, a secured party does not lose protection if the initial perfection was proper. 
C)  The dealership, because it properly perfected its security interest, which automatically perfected when Yuka moved to Colorado. 
D)  Rocky Bank, because, although the dealership properly perfected its security interest before Rocky Bank, the dealership failed to re-perfect its interest in the new state. 
E)  Rocky Bank, because even if the dealership had perfected its security interest in Colorado within four months of when the truck was brought into the state, the bank would have priority over a car dealership.

Question 8

Which method(s) of perfection must be used for stocks and bonds?

Accepted Answer

A)  Automatic perfection. 
B)  Perfection by filing. 
C)  Perfection by possession. 
D)  Perfection by filing or perfection by possession. 
E)  Any method of perfection is acceptable for stocks and bonds. 
A)  Automatic perfection. 
B)  Perfection by filing. 
C)  Perfection by possession. 
D)  Perfection by filing or perfection by possession. 
E)  Any method of perfection is acceptable for stocks and bonds.

Question 9

A security interest may apply to personal property that is not yet in the debtor's possession.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is true regarding the manner in which a secured party may sell collateral?

Accepted Answer

A)  The sale must be in a private sale only. 
B)  The sale must be in a public sale only. 
C)  The sale must be in an acknowledged sale. 
D)  The sale may be in a private sale, public sale, or an acknowledged sale. 
E)  The sale may be in either a private sale or a public sale. 
A)  The sale must be in a private sale only. 
B)  The sale must be in a public sale only. 
C)  The sale must be in an acknowledged sale. 
D)  The sale may be in a private sale, public sale, or an acknowledged sale. 
E)  The sale may be in either a private sale or a public sale.

Question 11

[Repo] Meredith sells used cars and trucks. She sold a used pick-up truck to Jill and a used convertible to Caleb. She properly obtained a security interest in both vehicles. Both Jill and Caleb defaulted on payments owed to Meredith for the vehicles. Meredith was under the belief that her only option was to take possession of the collateral. She decided to repossess Jill's pick-up at Jill's house. Meredith slipped into Jill's driveway after midnight and started the truck's engine. Jill immediately ran out and confronted Meredith. Meredith shoved Jill away and drove off in the pick-up truck. Meredith was able to repossess Caleb's convertible in a public parking lot with no altercation with him.
-Which statement is correct regarding Meredith's belief that her only option was to take possession of the collateral?

Accepted Answer

A)  Meredith was correct regardless of whether a vehicle or another type of good was involved. 
B)  Meredith was correct, but only because a vehicle was involved. 
C)  Meredith was incorrect, because only when a vehicle is involved, a party must disregard the collateral and proceed to judgment. 
D)  Meredith was incorrect because regardless of whether a vehicle or another type of good was involved, Meredith only had the right to ignore the collateral and proceed to judgment. 
E)  Meredith was incorrect because regardless of whether a vehicle or another type of good was involved, Meredith had the right to either take possession of the collateral or ignore rights in the collateral and proceed to judgment. 
A)  Meredith was correct regardless of whether a vehicle or another type of good was involved. 
B)  Meredith was correct, but only because a vehicle was involved. 
C)  Meredith was incorrect, because only when a vehicle is involved, a party must disregard the collateral and proceed to judgment. 
D)  Meredith was incorrect because regardless of whether a vehicle or another type of good was involved, Meredith only had the right to ignore the collateral and proceed to judgment. 
E)  Meredith was incorrect because regardless of whether a vehicle or another type of good was involved, Meredith had the right to either take possession of the collateral or ignore rights in the collateral and proceed to judgment.

Question 12

UCC ________ governs secured transactions in personal property.

Accepted Answer

A)  Article 1. 
B)  Article 4. 
C)  Article 5. 
D)  Article 7. 
E)  Article 9. 
A)  Article 1. 
B)  Article 4. 
C)  Article 5. 
D)  Article 7. 
E)  Article 9.

Question 13

[Overextended Debtor] Michael bought a flat screen television for his living room from ABC Electronics, and financed the purchase through ABC Electronics. Later, Michael bought a boat, a new car, and an expensive engagement ring for his girlfriend, and found he was unable to continue making payments on the television. The manager of ABC Electronics called 60 days after the sale and asked Michael to return the television. Michael refused on the basis that ABC Electronics never perfected its interest in the television. He also explained that he had later granted a secured interest in the television along with his other goods to XYZ Credit in return for a loan. No financing statement was filed on behalf of ABC Electronics although XYZ Credit, with no knowledge of any interest of ABC Electronics, did file a financing statement.
-What is the proper designation for the television, under the UCC?

Accepted Answer

A)  It is a consumer good 
B)  It is a pledge 
C)  It is an allonge 
D)  It is unsecured property 
E)  It is equipment 
A)  It is a consumer good 
B)  It is a pledge 
C)  It is an allonge 
D)  It is unsecured property 
E)  It is equipment

Question 14

The owner of Potter's Pottery also purchased two laptop computers under the name "Potter's Pottery" from BigBox Store for use in the store. Does BigBox Store's security interest automatically perfect?

Accepted Answer

A)  Yes, even though the laptops are used primarily for business, the laptops are consumer goods. 
B)  Yes, because the laptops are consumer goods, and, for public policy reasons, the security interest in them will always perfect automatically. 
C)  No, the laptops are purchased for business use and the secured party would have to file a financing statement to perfect the security interest in them. 
D)  No, the laptops are purchased for business use and the secured party would have to make a notation on the title to perfect the security interest in them. 
E)  No, even though the laptops are used primarily for business, the laptops are consumer goods and the secured party would have to file a financing statement to perfect the security interest in them. 
A)  Yes, even though the laptops are used primarily for business, the laptops are consumer goods. 
B)  Yes, because the laptops are consumer goods, and, for public policy reasons, the security interest in them will always perfect automatically. 
C)  No, the laptops are purchased for business use and the secured party would have to file a financing statement to perfect the security interest in them. 
D)  No, the laptops are purchased for business use and the secured party would have to make a notation on the title to perfect the security interest in them. 
E)  No, even though the laptops are used primarily for business, the laptops are consumer goods and the secured party would have to file a financing statement to perfect the security interest in them.

Question 15

[Dirty Laundry] Morgan planned to start her own laundry business. She borrowed $60,000 from ABC Bank. She used her car and home as collateral and also gave ABC Bank an interest in any property she acquired after the security interest was made. The bank perfected its interest. Morgan purchased a new computer from XYZ Electronics for use in her business. XYZ obtained a purchase money security interest on the computer. Morgan was having problems with cash flow and failed to make payments to XYZ Electronics on the new computer. After the sale and before Morgan stopped making payments, XYZ had filed a financing statement. The electronics store sought to repossess the computer, but the bank opposed that. Morgan's business picked up and she was able to completely repay her loan to the bank and to XYZ. She requested that the bank discontinue its security interest, but the bank did not do so as requested by Morgan, and still had not done so 45 days after Morgan had paid off the loan and requested that the bank terminate its interest.
-Which statement is correct regarding the effect of XYZ Electronics filing a financing statement?

Accepted Answer

A)  The interest was perfected. 
B)  The interest was guaranteed. 
C)  The interest was secured. 
D)  The interest was acknowledged. 
E)  There was no effect because there can only be one security interest, and the bank already had that. 
A)  The interest was perfected. 
B)  The interest was guaranteed. 
C)  The interest was secured. 
D)  The interest was acknowledged. 
E)  There was no effect because there can only be one security interest, and the bank already had that.

Question 16

When Brenn, who is a debtor, sells collateral that she has, Brenn will receive ________, something that is exchanged for collateral.

Accepted Answer

A)  after-acquired property 
B)  subsequent-acquired property 
C)  proceeds 
D)  collateral 
E)  post-financed funds 
A)  after-acquired property 
B)  subsequent-acquired property 
C)  proceeds 
D)  collateral 
E)  post-financed funds

Question 17

Which of the following purchases can be perfected automatically?

Accepted Answer

A)  A television purchased for an individual's home, a delivery van a corporation purchases to deliver product, and a certificate of deposit. 
B)  A television purchased for an individual's home and a delivery van a corporation purchases to deliver product, but not a certificate of deposit. 
C)  A television purchased for an individual's home, but not a delivery van a corporation purchases to deliver product nor a certificate of deposit. 
D)  A delivery van a corporation purchases to deliver product, but not a television purchased for an individual's home nor a certificate of deposit. 
E)  A television purchased for an individual's home, a delivery van a corporation purchases to deliver product, and a certificate of deposit must be perfected by filing. 
A)  A television purchased for an individual's home, a delivery van a corporation purchases to deliver product, and a certificate of deposit. 
B)  A television purchased for an individual's home and a delivery van a corporation purchases to deliver product, but not a certificate of deposit. 
C)  A television purchased for an individual's home, but not a delivery van a corporation purchases to deliver product nor a certificate of deposit. 
D)  A delivery van a corporation purchases to deliver product, but not a television purchased for an individual's home nor a certificate of deposit. 
E)  A television purchased for an individual's home, a delivery van a corporation purchases to deliver product, and a certificate of deposit must be perfected by filing.

Question 18

Does the fact that the financing statement was filed four years ago affect the bank's claim?

Accepted Answer

A)  No, under the UCC, a financing statement is valid indefinitely. 
B)  No, under the UCC, a financing statement is valid for five years. 
C)  Yes, under the UCC, a financing statement is valid for three years. 
D)  Yes, under the UCC, a financing statement is valid for two years. 
E)  Yes, under the UCC, a financing statement is valid for three years and can be automatically renewed for two year increments. 
A)  No, under the UCC, a financing statement is valid indefinitely. 
B)  No, under the UCC, a financing statement is valid for five years. 
C)  Yes, under the UCC, a financing statement is valid for three years. 
D)  Yes, under the UCC, a financing statement is valid for two years. 
E)  Yes, under the UCC, a financing statement is valid for three years and can be automatically renewed for two year increments.

Question 19

The transfer of collateral to the secured party for the purpose of perfection is called the ________

Accepted Answer

A)  purpose 
B)  pledge 
C)  endeavor 
D)  detriment 
E)  collateral 
A)  purpose 
B)  pledge 
C)  endeavor 
D)  detriment 
E)  collateral

Question 20

The bank should have done what to terminate its interest in any property belonging to Morgan?

Accepted Answer

A)  The bank should have filed a termination statement within 20 days. 
B)  The bank should have filed a termination statement within one month. 
C)  The bank should have filed a waiver statement within 20 days. 
D)  The bank should have filed a waiver statement within one month. 
E)  The bank should have filed a stopgap statement by the time Morgan's next payment was due had she not paid off the loan. 
A)  The bank should have filed a termination statement within 20 days. 
B)  The bank should have filed a termination statement within one month. 
C)  The bank should have filed a waiver statement within 20 days. 
D)  The bank should have filed a waiver statement within one month. 
E)  The bank should have filed a stopgap statement by the time Morgan's next payment was due had she not paid off the loan.

Exam 30: Secured Transactions

According to the UCC, which of the following should a financing statement list?

Explain three advantages described in the text associated with perfection by possession.

Which of the following would not be considered collateral?

Which of the following is true in regards to a dispute when two parties have given a loan over collateral?

The party that perfects its interest in collateral has first claim, when two parties have an interest in the same collateral.

Which of the following is the term associated with a creditor becoming the secured party who has a security interest in the collateral when this event happens?

Which method(s) of perfection must be used for stocks and bonds?

A security interest may apply to personal property that is not yet in the debtor's possession.

Which of the following is true regarding the manner in which a secured party may sell collateral?

UCC ________ governs secured transactions in personal property.

The owner of Potter's Pottery also purchased two laptop computers under the name "Potter's Pottery" from BigBox Store for use in the store. Does BigBox Store's security interest automatically perfect?

When Brenn, who is a debtor, sells collateral that she has, Brenn will receive ________, something that is exchanged for collateral.

Which of the following purchases can be perfected automatically?

Does the fact that the financing statement was filed four years ago affect the bank's claim?

The transfer of collateral to the secured party for the purpose of perfection is called the ________

The bank should have done what to terminate its interest in any property belonging to Morgan?

An Introduction to Dynamic Business Law

Business Ethics

The Us Legal System

Alternative Dispute Resolution

Constitutional Principles

International and Comparative Law

Crime and the Business Community

Tort Law

Negligence and Strict Liability

Product Liability

Liability of Accountants and Other Professionals

Intellectual Property

Introduction to Contracts

Agreement

Consideration

Capacity and Legality

Legal Assent

Contracts in Writing

Third-Party Rights to Contracts

Discharge and Remedies

Introduction to Sales and Lease Contracts

Title, Risk of Loss, and Insurable Interest

Performance and Obligations Under Sales and Leases

Remedies for Breach of Sales and Lease Contracts

Warranties

Negotiable Instruments: Negotiability and Transferability

Negotiation, Holder in Due Course, and Defenses

Liability, Defenses, and Discharge

Checks and Electronic Fund Transfers

Other Creditors Remedies and Suretyship

Bankruptcy and Reorganization

Agency Formation and Duties

Liability to Third Parties and Termination

Forms of Business Organization

Partnerships: Nature, Formation, and Operation

Partnerships: Termination and Limited Partnerships

Corporations: Formation and Financing

Corporations: Directors, Officers, and Shareholders

Corporations: Mergers, Consolidations, Terminations

Corporations: Securities and Investor Protection

Employment and Labor Law

Employment Discrimination

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

The Nature of Property, Personal Property, and Bailments

Real Property

Landlord-Tenant Law

Insurance Law

Wills and Trusts

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