Question 1

Every consensual secured transaction involves:

Accepted Answer

A)  a debtor and  a secured party. 
B)  collateral. 
C)  a security agreement and a security interest. 
D)  All of these. 
A)  a debtor and  a secured party. 
B)  collateral. 
C)  a security agreement and a security interest. 
D)  All of these.

Question 2

The creditor's rights against the principal debtor are determined by the contract between them.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is a type of collateral involving rights evidenced by indispensable paper?

Accepted Answer

A)  A certificated security. 
B)  An uncertificated security. 
C)  A security entitlement. 
D)  All of these. 
A)  A certificated security. 
B)  An uncertificated security. 
C)  A security entitlement. 
D)  All of these.

Question 4

A buyer in the ordinary course of business takes collateral (other than farm products) free of any security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence.

Accepted Answer

A) True 
 B)False

Question 5

The right of a surety who has paid the creditor to be repaid by the principal debtor is:

Accepted Answer

A)  exoneration. 
B)  subrogation. 
C)  reimbursement. 
D)  None of these. 
A)  exoneration. 
B)  subrogation. 
C)  reimbursement. 
D)  None of these.

Question 6

A car buyer in the ordinary course of business will take free and clear of a security interest created by any person who owned the automobile prior to the dealer.

Accepted Answer

A) True 
 B)False

Question 7

"Perfection" is required in order for the secured party to enforce rights against the debtor.

Accepted Answer

A) True 
 B)False

Question 8

The right of exoneration allows the surety to require the principal debtor to pay his obligation to the creditor.

Accepted Answer

A) True 
 B)False

Question 9

Elmer agreed to act as the conditional guarantor of collection on a debt of $50,000 that Fred owed to Gloria. Fred paid Elmer a premium to serve as surety. If Fred defaults on the debt, what are Gloria's rights against Elmer?

Accepted Answer

Fred has only agreed to act as

Question 10

"Attachment" occurs when a secured party gives value, the debtor has acquired rights in the collateral, and:

Accepted Answer

A)  the debtor has completed his obligation to pay. 
B)  the collateral is delivered to the borrower. 
C)  the debtor and secured party have an agreement. 
D)  All of these. 
A)  the debtor has completed his obligation to pay. 
B)  the collateral is delivered to the borrower. 
C)  the debtor and secured party have an agreement. 
D)  All of these.

Question 11

Dr. Wells purchased a refrigerator for use in storing medications at his office. The refrigerator will be classified as:

Accepted Answer

A)  consumer goods. 
B)  equipment. 
C)  a fixture. 
D)  inventory. 
A)  consumer goods. 
B)  equipment. 
C)  a fixture. 
D)  inventory.

Question 12

Article 9 of the UCC applies to a security interest without consent that arises by operation of law, such as a mechanic's lien.

Accepted Answer

A) True 
 B)False

Question 13

The surety does not have the right of contribution from cosureties.

Accepted Answer

A) True 
 B)False

Question 14

A defense that can only be asserted by the principal debtor is called a:

Accepted Answer

A)  real defense. 
B)  subrogated defense. 
C)  personal defense. 
D)  joint defense. 
A)  real defense. 
B)  subrogated defense. 
C)  personal defense. 
D)  joint defense.

Question 15

Bill lends Harvey $1,500 and the loan is secured by Harvey's furniture. If Bill files a financing statement on January 30, 2012 how long will it be effective?

Accepted Answer

A)  Until July 30, 2012. 
B)  Until January 30, 2017. 
C)  Until January 30, 2032 
D)  For 30 days. 
A)  Until July 30, 2012. 
B)  Until January 30, 2017. 
C)  Until January 30, 2032 
D)  For 30 days.

Question 16

A security interest is ineffective against the debtor until it "attaches."

Accepted Answer

A) True 
 B)False

Question 17

In states which have adopted certificate of title statutes for automobiles, trailers, mobile homes, and boats, perfection of a security interest must include both filing of a financing statement and notation on the certificate of title.

Accepted Answer

A) True 
 B)False

Question 18

What party(ies) is/are involved in a suretyship relationship?

Accepted Answer

A)  The principal debtor. 
B)  An ancillary bailee. 
C)  Principal bailee. 
D)  All of these. 
A)  The principal debtor. 
B)  An ancillary bailee. 
C)  Principal bailee. 
D)  All of these.

Question 19

Under the Code, collateral is classified according to:

Accepted Answer

A)  its nature and use. 
B)  the fundamental rights of the secured party. 
C)  the fundamental rights of the debtor. 
D)  None of these. 
A)  its nature and use. 
B)  the fundamental rights of the secured party. 
C)  the fundamental rights of the debtor. 
D)  None of these.

Question 20

A surety may set off his claims against the creditor if the creditor is solvent.

Accepted Answer

A) True 
 B)False

Exam 37: Secured Transactions and Suretyship

Every consensual secured transaction involves:

The creditor's rights against the principal debtor are determined by the contract between them.

Which of the following is a type of collateral involving rights evidenced by indispensable paper?

A buyer in the ordinary course of business takes collateral (other than farm products) free of any security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence.

The right of a surety who has paid the creditor to be repaid by the principal debtor is:

A car buyer in the ordinary course of business will take free and clear of a security interest created by any person who owned the automobile prior to the dealer.

"Perfection" is required in order for the secured party to enforce rights against the debtor.

The right of exoneration allows the surety to require the principal debtor to pay his obligation to the creditor.

Elmer agreed to act as the conditional guarantor of collection on a debt of $50,000 that Fred owed to Gloria. Fred paid Elmer a premium to serve as surety. If Fred defaults on the debt, what are Gloria's rights against Elmer?

"Attachment" occurs when a secured party gives value, the debtor has acquired rights in the collateral, and:

Dr. Wells purchased a refrigerator for use in storing medications at his office. The refrigerator will be classified as:

Article 9 of the UCC applies to a security interest without consent that arises by operation of law, such as a mechanic's lien.

The surety does not have the right of contribution from cosureties.

A defense that can only be asserted by the principal debtor is called a:

Bill lends Harvey $1,500 and the loan is secured by Harvey's furniture. If Bill files a financing statement on January 30, 2012 how long will it be effective?

A security interest is ineffective against the debtor until it "attaches."

In states which have adopted certificate of title statutes for automobiles, trailers, mobile homes, and boats, perfection of a security interest must include both filing of a financing statement and notation on the certificate of title.

What party(ies) is/are involved in a suretyship relationship?

Under the Code, collateral is classified according to:

A surety may set off his claims against the creditor if the creditor is solvent.

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