Question 1

Wombart Manufacturing sells a machine on credit to Cryslie Printing Co.Wombart insists on a security interest in the machine to:

Accepted Answer

A) give itself a legal interest in the machine. 
B) give itself a legal interest in all of Cryslie's property. 
C) establish a priority claim in the machine ahead of other creditors of Cryslie. 
D) Both a and c. 
A) give itself a legal interest in the machine. 
B) give itself a legal interest in all of Cryslie's property. 
C) establish a priority claim in the machine ahead of other creditors of Cryslie. 
D) Both a and c. D

Question 2

Wedney,Inc.has a purchase money security interest in one of Yoro Chicken's meat processing machines.Wedney filed a financing statement on the day the machine was delivered,perfecting its interest.Great State Bank already had a security interest in the machine.Which party has superior priority rights in the meat processing machine?

Accepted Answer

A) Wedney.A PMSI in collateral other than inventory takes priority over a conflicting security interest if the PMSI is perfected at the time the debtor receives the collateral or within 20 days after he receives it. 
B) Great State Bank, since it had an earlier security interest. 
C) The party who is first to repossess the collateral. 
D) The creditors have equal priority. 
A) Wedney.A PMSI in collateral other than inventory takes priority over a conflicting security interest if the PMSI is perfected at the time the debtor receives the collateral or within 20 days after he receives it. 
B) Great State Bank, since it had an earlier security interest. 
C) The party who is first to repossess the collateral. 
D) The creditors have equal priority. A

Question 3

A security interest in money may be perfected by:

Accepted Answer

A) filing a financing statement. 
B) creating a PMSI. 
C) possession only. 
D) redemption. 
A) filing a financing statement. 
B) creating a PMSI. 
C) possession only. 
D) redemption. C

Question 4

Masterview,Inc.purchased a new computer system,which included some computer programs.When Masterview developed financial troubles,two competing creditors of Masterview claimed the right to repossess the computer system and the programs.The UCC distinguishes "software" from "goods" and treats them differently for some purposes,which would be important in this situation.

Accepted Answer

A) True 
 B)False

Question 5

First Federal had a perfected security interest in Vicor's printing press.Second Credit had a security interest in the same press,but its interest was not perfected.First Federal takes priority over Second Credit.

Accepted Answer

A) True 
 B)False

Question 6

Gateway sold a big-screen TV and entertainment center to Iris for $2000 on credit.Iris signed a promissory note and gave Gateway a security interest in the TV and entertainment center.Gateway filed a financing statement in the appropriate public office.When Iris defaulted on her monthly payments owing a balance of $1780,Gateway's attorney made arrangements to have the TV and entertainment center repossessed.The attorney then placed classified ads in the local newspaper to sell the goods.The attorney's fees are $300,the repo company charged $150,and the advertising costs are $50.
(A)If Iris chooses to redeem the property,how much must she pay to Gateway to recover the property?
(B)If Iris does not redeem and the TV and entertainment center are sold for $1750,how will the money be disbursed?

Accepted Answer

(A)Up to the time that the secured party

Question 7

February 5,Panda Gardens puts up its Chinese cookie inventory as well as any future inventory as collateral for a loan from Fortune Bank.Fortune Bank perfects by filing a financing statement the same day.June 10,Panda Gardens buys unstuffed fortune cookies from Olga under a purchase money security interest.Olga notifies Fortune Bank of her PMSI and perfects the PMSI by filing a financing statement before Panda Gardens takes possession of the unstuffed cookies.Panda Gardens,failing to predict hard times,filed for bankruptcy.As between Fortune Bank and Olga,who has the superior interest in the unstuffed fortune cookies purchased on June 10?

Accepted Answer

A) Fortune Bank.The first to file has the priority interest in the inventory. 
B) Olga, in this situation.Her PMSI in inventory has met the conditions in order to take priority over a conflicting perfected security interest. 
C) Olga and Fortune Bank share proportionately the priority interest in the inventory. 
D) Neither Olga nor Fortune have a priority interest.The employees and the IRS have superior claims. 
A) Fortune Bank.The first to file has the priority interest in the inventory. 
B) Olga, in this situation.Her PMSI in inventory has met the conditions in order to take priority over a conflicting perfected security interest. 
C) Olga and Fortune Bank share proportionately the priority interest in the inventory. 
D) Neither Olga nor Fortune have a priority interest.The employees and the IRS have superior claims.

Question 8

Which of the following parties can defeat a perfected security interest?

Accepted Answer

A) A "buyer in ordinary course of business." 
B) A buyer of consumer goods if the buyer is not aware of the security interest, gives value for the goods, will continue to use the goods as consumer goods, and the secured party has not filed a financing statement. 
C) A buyer who purchases chattel paper or an instrument in the ordinary course of business, and then takes possession. 
D) All of the above are correct. 
A) A "buyer in ordinary course of business." 
B) A buyer of consumer goods if the buyer is not aware of the security interest, gives value for the goods, will continue to use the goods as consumer goods, and the secured party has not filed a financing statement. 
C) A buyer who purchases chattel paper or an instrument in the ordinary course of business, and then takes possession. 
D) All of the above are correct.

Question 9

Discuss the concept of software under Article 9.

Accepted Answer

Article 9 takes into account the increas

Question 10

Great State Bank took a security interest in Gresham,Inc.'s meat processing equipment.Gresham defaulted on the loan.Which statement is correct?

Accepted Answer

A) Great State Bank may take possession of the collateral. 
B) Great State Bank may ignore its rights in the collateral and sue Gresham for the money owed. 
C) Both a and b are courses of action that Great State Bank may follow. 
D) Neither a nor b are courses of action that Great State Bank may follow. 
A) Great State Bank may take possession of the collateral. 
B) Great State Bank may ignore its rights in the collateral and sue Gresham for the money owed. 
C) Both a and b are courses of action that Great State Bank may follow. 
D) Neither a nor b are courses of action that Great State Bank may follow.

Question 11

Revised Article 9 of the UCC only applies to goods and does not include intangibles such as accounts or chattel paper.

Accepted Answer

A) True 
 B)False

Question 12

Frank purchased a plasma TV with his store credit card.He later sold the TV to Greg.Frank defaulted on his payments to the store and declared bankruptcy.The store may:

Accepted Answer

A) repossess the TV as it has a security interest in it. 
B) not repossess the TV if Greg shows he did not know about the security interest the store had in the TV. 
C) not repossess the TV as security interests may not be attached to consumer goods. 
D) repossess the TV as Frank's title was void. 
A) repossess the TV as it has a security interest in it. 
B) not repossess the TV if Greg shows he did not know about the security interest the store had in the TV. 
C) not repossess the TV as security interests may not be attached to consumer goods. 
D) repossess the TV as Frank's title was void.

Question 13

Faith owns a copyright in a book she recently wrote.She applies for a $10,000 loan through Cumberland Bank and wants to use the copyright as collateral.Explain if and how the bank can perfect a security interest in such collateral.

Accepted Answer

A copyright is a part of a residual cate

Question 14

Spicy & Hot,Inc.is interested in expanding its Mexican food restaurant into a Mexican food catering business.Spicy & Hot,Inc.buys a new van for deliveries from Van World.Spicy & Hot,Inc.is a buyer in the ordinary course of business when purchasing the van.

Accepted Answer

A) True 
 B)False

Question 15

All but which of the following may be used as collateral in a secured transaction under UCC Revised Article 9?

Accepted Answer

A) Bank deposit accounts. 
B) Personal injury tort claims of individuals. 
C) Tort claims of a corporation. 
D) A computer program if, by purchasing a computer, the buyer of the computer acquires the right to use that embedded program. 
E) Both b and 
A) Bank deposit accounts. 
B) Personal injury tort claims of individuals. 
C) Tort claims of a corporation. 
D) A computer program if, by purchasing a computer, the buyer of the computer acquires the right to use that embedded program. 
E) Both b and

Question 16

Vicor,Inc.holds a patent on a drug.Vicor used the patent to secure a $1 million loan from First Bank.The patent is a general intangible.

Accepted Answer

A) True 
 B)False

Question 17

The initial term for which a financing statement will be effective is:

Accepted Answer

A) one year. 
B) five years. 
C) ten years. 
D) It depends on what the secured party decides. 
A) one year. 
B) five years. 
C) ten years. 
D) It depends on what the secured party decides.

Question 18

Fowler Bros.has applied to Gibralter Bank for a $50,000 loan for its business expansion.If Fowler Bros.plans to use its account at Gibralter Bank as collateral,discuss what the bank needs to do for a security interest to attach.

Accepted Answer

Attachment is a vital step in a secured

Question 19

Article 9 applies to any transaction intended to create a security interest in real property.

Accepted Answer

A) True 
 B)False

Question 20

Aubry purchased a washing machine,a freezer,and a refrigerator from Gateway Appliances on credit,giving Gateway a security interest in the appliances.The appliances were for Aubry's household use.Gateway did not file a financing statement.Six months later,Aubry had a garage sale and sold the appliances to Tam.Tam bought the appliances for her student rental property.Aubry left town owing money on the appliances.If Gateway can trace the appliances to Tam,can Gateway repossess the appliances? Explain in detail.

Accepted Answer

Yes.Generally with consumer goods,a buye

Exam 25: Secured Transactions

Wombart Manufacturing sells a machine on credit to Cryslie Printing Co.Wombart insists on a security interest in the machine to:

A security interest in money may be perfected by:

First Federal had a perfected security interest in Vicor's printing press.Second Credit had a security interest in the same press,but its interest was not perfected.First Federal takes priority over Second Credit.

Which of the following parties can defeat a perfected security interest?

Discuss the concept of software under Article 9.

Great State Bank took a security interest in Gresham,Inc.'s meat processing equipment.Gresham defaulted on the loan.Which statement is correct?

Revised Article 9 of the UCC only applies to goods and does not include intangibles such as accounts or chattel paper.

Frank purchased a plasma TV with his store credit card.He later sold the TV to Greg.Frank defaulted on his payments to the store and declared bankruptcy.The store may:

Faith owns a copyright in a book she recently wrote.She applies for a $10,000 loan through Cumberland Bank and wants to use the copyright as collateral.Explain if and how the bank can perfect a security interest in such collateral.

Spicy & Hot,Inc.is interested in expanding its Mexican food restaurant into a Mexican food catering business.Spicy & Hot,Inc.buys a new van for deliveries from Van World.Spicy & Hot,Inc.is a buyer in the ordinary course of business when purchasing the van.

All but which of the following may be used as collateral in a secured transaction under UCC Revised Article 9?

Vicor,Inc.holds a patent on a drug.Vicor used the patent to secure a $1 million loan from First Bank.The patent is a general intangible.

The initial term for which a financing statement will be effective is:

Fowler Bros.has applied to Gibralter Bank for a $50,000 loan for its business expansion.If Fowler Bros.plans to use its account at Gibralter Bank as collateral,discuss what the bank needs to do for a security interest to attach.

Article 9 applies to any transaction intended to create a security interest in real property.

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