Question 1

A continuation statement is effective only if it is filed within six months before the expiration of a financing statement.

Accepted Answer

A) True 
 B)False

Question 2

Proceeds consist of whatever is received when collateral is sold.

Accepted Answer

A) True 
 B)False

Question 3

Fact Pattern 19-1
General Leasing Company (GLC) buys equipment for use as inventory,borrow-ing $1 million from Helpful Finance Corporation for a security in-terest in the equipment.The next day,GLC borrows $500,000 from Interstate Bank,also for a security interest in the equipment.GLC defaults on the loans.
-Refer to Fact Pattern 19-1.Suppose that two weeks after GLC takes pos-session of the equipment,Helpful and Interstate file financing state-ments,with Interstate fil-ing first.In that cir-cum-stance,the party with priority to the equipment is

Accepted Answer

A) GLC. 
B) Helpful and Interstate proportionately. 
C) Helpful only. 
D) Interstate only. 
A) GLC. 
B) Helpful and Interstate proportionately. 
C) Helpful only. 
D) Interstate only.

Question 4

The failure to pay a debt as promised is known as default.

Accepted Answer

A) True 
 B)False

Question 5

Sweetwater Café defaults on debts to Town & Country Bank and Uno Loan Company.Town & Country perfected its security interest before Uno.Town & Country takes possession of the collateral in which it has a security interest.On a sale of the collat-eral,the proceeds will be applied first to

Accepted Answer

A) Sweetwater's previous payments on the debts. 
B) Sweetwater's unpaid payments on the debts. 
C) the balance of Sweetwater's debt to Town & Country. 
D) the balance of Sweetwater's debt to Uno. 
A) Sweetwater's previous payments on the debts. 
B) Sweetwater's unpaid payments on the debts. 
C) the balance of Sweetwater's debt to Town & Country. 
D) the balance of Sweetwater's debt to Uno.

Question 6

The payment of Waldo's debt to Main Street Bank is guaranteed by Waldo's personal prop-erty.This is governed by

Accepted Answer

A) the Uniform Commercial Code. 
B) the Federal Trade Commission. 
C) the U.S.Constitution's commerce clause. 
D) the Bankruptcy Reform Act of 2005. 
A) the Uniform Commercial Code. 
B) the Federal Trade Commission. 
C) the U.S.Constitution's commerce clause. 
D) the Bankruptcy Reform Act of 2005.

Question 7

A security interest is enforceable only if the collateral is in the secured party's possession.

Accepted Answer

A) True 
 B)False

Question 8

A financing statement is effective for five years from the date of filing.

Accepted Answer

A) True 
 B)False

Question 9

A financing statement must include a description of the collateral by type or item.

Accepted Answer

A) True 
 B)False

Question 10

Pete borrows $5,000 from Willy in a secured transaction using Pete's BMW as collateral.Pete then borrows $7,000 from Janet using the same car as collateral.Neither Willy nor Janet perfects their security interests.Pete defaults on the loans.The party with priority is

Accepted Answer

A) Willy,because his interest was the first to attach. 
B) Janet,because Pete owes her more money. 
C) Janet,because her interest was the second to attach. 
D) Willy,because Pete owes him less money. 
A) Willy,because his interest was the first to attach. 
B) Janet,because Pete owes her more money. 
C) Janet,because her interest was the second to attach. 
D) Willy,because Pete owes him less money.

Question 11

Everyday Loans,Inc.,issues a line of credit in Glade Electronics Corporation under a security agreement.Later,Glade buys new HD-TVs to add to its inventory.Everyday has a security interest in the new inventory

Accepted Answer

A) if the security agreement included an after-acquired property clause. 
B) if Everyday has not yet filed a financing statement. 
C) if Glade bought the inventory with Everyday funds. 
D) under no circumstances. 
A) if the security agreement included an after-acquired property clause. 
B) if Everyday has not yet filed a financing statement. 
C) if Glade bought the inventory with Everyday funds. 
D) under no circumstances.

Question 12

To qualify as a commercially reasonable sale,a secured party's sale of col-lateral,after default and repossession,must be private.

Accepted Answer

A) True 
 B)False

Exam 19: Secured Transactions

A continuation statement is effective only if it is filed within six months before the expiration of a financing statement.

Proceeds consist of whatever is received when collateral is sold.

The failure to pay a debt as promised is known as default.

Sweetwater Café defaults on debts to Town & Country Bank and Uno Loan Company.Town & Country perfected its security interest before Uno.Town & Country takes possession of the collateral in which it has a security interest.On a sale of the collat-eral,the proceeds will be applied first to

The payment of Waldo's debt to Main Street Bank is guaranteed by Waldo's personal prop-erty.This is governed by

A security interest is enforceable only if the collateral is in the secured party's possession.

A financing statement is effective for five years from the date of filing.

A financing statement must include a description of the collateral by type or item.

Pete borrows $5,000 from Willy in a secured transaction using Pete's BMW as collateral.Pete then borrows $7,000 from Janet using the same car as collateral.Neither Willy nor Janet perfects their security interests.Pete defaults on the loans.The party with priority is

Everyday Loans,Inc.,issues a line of credit in Glade Electronics Corporation under a security agreement.Later,Glade buys new HD-TVs to add to its inventory.Everyday has a security interest in the new inventory

To qualify as a commercially reasonable sale,a secured party's sale of col-lateral,after default and repossession,must be private.

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