Question 1

How long does a debtor have in which to object to a secured party's retention of collateral to satisfy a debt?

Accepted Answer

A)  5 Days. 
B)  10 Days. 
C)  20 Days. 
D)  30 Days. 
E)  60 Days. 
A)  5 Days. 
B)  10 Days. 
C)  20 Days. 
D)  30 Days. 
E)  60 Days. C

Question 2

Which of the following is true regarding what may constitute collateral?

Accepted Answer

A)  Goods, indispensable paper, intangibles, and proceeds may all constitute collateral. 
B)  Goods, indispensable paper, and intangibles may constitute collateral, but proceeds may not. 
C)  Goods may constitute collateral, but indispensable paper, intangibles, and proceeds may not. 
D)  Goods and proceeds may constitute collateral, but indispensable paper and intangibles may not. 
E)  Goods and intangibles may constitute collateral, but indispensable paper and proceeds may not. 
A)  Goods, indispensable paper, intangibles, and proceeds may all constitute collateral. 
B)  Goods, indispensable paper, and intangibles may constitute collateral, but proceeds may not. 
C)  Goods may constitute collateral, but indispensable paper, intangibles, and proceeds may not. 
D)  Goods and proceeds may constitute collateral, but indispensable paper and intangibles may not. 
E)  Goods and intangibles may constitute collateral, but indispensable paper and proceeds may not. A

Question 3

Set forth the steps that a creditor must take to become a secured party.

Accepted Answer

To become a secured party,the creditor must gain a security interest in the collateral of the debtor.The secured party must take the following three steps to create a security interest: (1)The two parties create a security agreement and either (a)there is a record of the security agreement (usually a written agreement that describes the collateral and is signed by the debtor)or (b)the secured party is in possession of the collateral; (2)The secured party must give value to get the security agreement; and (3)The debtor has a right in or to the collateral.

Question 4

A ______ is a person or party that has an obligation to the secured party.

Accepted Answer

A)  creditor 
B)  debtor 
C)  secured creditor 
D)  secured debtor 
E)  transaction debtor 
A)  creditor 
B)  debtor 
C)  secured creditor 
D)  secured debtor 
E)  transaction debtor

Question 5

Which of the following is the proper designation under the UCC for the television?

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 6

Which of the following is true regarding the court's opinion in Lingross v.Heilig-Meyers Furniture,the case in the text in which the plaintiffs alleged that the defending furniture store's agents engaged in wrongful repossession efforts?

Accepted Answer

A)  The court ruled that the defendant had no right to engage in self help in regard to repossession, regardless of whether or not it had a judgment. 
B)  The court ruled that because it had no judgment against the debtor, the defendant had no right to engage in self help in regard to repossession. 
C)  The court ruled that because it did not physically harm any residents of the home, the defendant rightfully exercised its self help rights in regard to repossession. 
D)  The court ruled that a creditor may engage in self help repossession where the creditor can do so without a breach of the peace and also that a debtor's protest at repossession terminates the creditor's self help rights. 
E)  The court ruled that a creditor may engage in self help repossession where the creditor can do so without a breach of the peace and that a creditor retains those rights regardless of whether or not a debtor protests. 
A)  The court ruled that the defendant had no right to engage in self help in regard to repossession, regardless of whether or not it had a judgment. 
B)  The court ruled that because it had no judgment against the debtor, the defendant had no right to engage in self help in regard to repossession. 
C)  The court ruled that because it did not physically harm any residents of the home, the defendant rightfully exercised its self help rights in regard to repossession. 
D)  The court ruled that a creditor may engage in self help repossession where the creditor can do so without a breach of the peace and also that a debtor's protest at repossession terminates the creditor's self help rights. 
E)  The court ruled that a creditor may engage in self help repossession where the creditor can do so without a breach of the peace and that a creditor retains those rights regardless of whether or not a debtor protests.

Question 7

What should the bank have done to terminate its interest in any property of Molly?

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 Molly'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 Molly's next payment was due had she not paid off the loan.

Question 8

Which of the following is true regarding the effect of XYZ Electronics filing a security interest?

Accepted Answer

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

Question 9

Which of the following is true regarding a secured party's interest in proceeds?

Accepted Answer

A)  A secured party automatically has an interest in proceeds. 
B)  A secured party has an interest in proceeds only if the proceeds are taken into the possession of the secured party. 
C)  A secured party has an interest in proceeds only if a financing statement is filed on the proceeds. 
D)  A secured party has an interest in proceeds only if the secured party has a signed statement from the debtor granting an interest in proceeds. 
E)  The secured party may not acquire a security interest in proceeds. 
A)  A secured party automatically has an interest in proceeds. 
B)  A secured party has an interest in proceeds only if the proceeds are taken into the possession of the secured party. 
C)  A secured party has an interest in proceeds only if a financing statement is filed on the proceeds. 
D)  A secured party has an interest in proceeds only if the secured party has a signed statement from the debtor granting an interest in proceeds. 
E)  The secured party may not acquire a security interest in proceeds.

Question 10

Which of the following is defined as the series of legal steps a secured party takes to protect its rights and collateral from other creditors who wish to have their debts returned through the same collateral?

Accepted Answer

A)  Perfection 
B)  Filing 
C)  Noticing 
D)  Financing noticing 
E)  Arrangement 
A)  Perfection 
B)  Filing 
C)  Noticing 
D)  Financing noticing 
E)  Arrangement

Question 11

Which of the following was the result In Re Tower Air Inc.,the case in the text in which a debtor made repairs to an aircraft used as collateral without claiming available insurance proceeds,later filed bankruptcy,and the bankruptcy trustee and the creditor each claimed entitlement to the insurance proceeds?

Accepted Answer

A)  The court ruled in favor of the bankruptcy trustee on the basis that regardless of whether or not repairs were made, the right to claim the proceeds belonged to the debtor; and the trustee succeeded to the rights of the debtor. 
B)  The court ruled in favor of the bankruptcy trustee on the basis that because the debtor had already repaired the collateral, the trustee was entitled to the proceeds of the insurance policy. 
C)  The court ruled in favor of the bankruptcy trustee on the basis that the trustee made first claim to the insurance proceeds and already had the proceeds in possession when the creditor first claimed entitlement to them. 
D)  The court ruled that the creditor was entitled to the full insurance proceeds, without consideration of the amount of the debt, on the basis that it had a secured interest. 
E)  The court ruled that the creditor was entitled to the proceeds of the insurance policy up to the amount of the debt on the basis that it had a secured interest. 
A)  The court ruled in favor of the bankruptcy trustee on the basis that regardless of whether or not repairs were made, the right to claim the proceeds belonged to the debtor; and the trustee succeeded to the rights of the debtor. 
B)  The court ruled in favor of the bankruptcy trustee on the basis that because the debtor had already repaired the collateral, the trustee was entitled to the proceeds of the insurance policy. 
C)  The court ruled in favor of the bankruptcy trustee on the basis that the trustee made first claim to the insurance proceeds and already had the proceeds in possession when the creditor first claimed entitlement to them. 
D)  The court ruled that the creditor was entitled to the full insurance proceeds, without consideration of the amount of the debt, on the basis that it had a secured interest. 
E)  The court ruled that the creditor was entitled to the proceeds of the insurance policy up to the amount of the debt on the basis that it had a secured interest.

Question 12

Which of the following is true regarding any compensation that Molly is entitled to from the bank because the bank did not timely file notice that it had no interest in her goods?

Accepted Answer

A)  She may recover $100 from the bank. 
B)  She may recover $200 from the bank. 
C)  She may recover $500 from the bank. 
D)  She may recover $1,000 from the bank. 
E)  She may not recover anything unless she incurred damages; and, in that event, she may recover the amount of her compensatory damages. 
A)  She may recover $100 from the bank. 
B)  She may recover $200 from the bank. 
C)  She may recover $500 from the bank. 
D)  She may recover $1,000 from the bank. 
E)  She may not recover anything unless she incurred damages; and, in that event, she may recover the amount of her compensatory damages.

Question 13

Which of the following is the proper designation for any equipment subject to the bank's security interest that Molly obtains after the initial loan agreement?

Accepted Answer

A)  After-acquired property. 
B)  Post-dated property. 
C)  Cover property. 
D)  Post-security property. 
E)  There is no title for such property because such property may not validly be the subject of the security interest. 
A)  After-acquired property. 
B)  Post-dated property. 
C)  Cover property. 
D)  Post-security property. 
E)  There is no title for such property because such property may not validly be the subject of the security interest.

Question 14

Which of the following is true if a buyer of a consumer good subject to purchase-money security interest later sells the good?

Accepted Answer

A)  The security interest immediately terminates. 
B)  The security interest passes to the new buyer. 
C)  Regardless of whether the buyer is aware of the security interest, so long as the buyer purchases the good for his or her personal use, the security interest terminates if the sale to the new buyer is made before the original secured party files a financial statement. 
D)  As long as the buyer is not aware of the security interest, purchases the good for his or her personal use, and purchases the good before the secured party files a financial statement, the new buyer obtains the good free of the security interest. 
E)  As long as the buyer is not aware of the security interest, purchases the good for personal use or resale, and purchases good before the secured party files a financial statement, the buyer obtains the good free of the security interest. 
A)  The security interest immediately terminates. 
B)  The security interest passes to the new buyer. 
C)  Regardless of whether the buyer is aware of the security interest, so long as the buyer purchases the good for his or her personal use, the security interest terminates if the sale to the new buyer is made before the original secured party files a financial statement. 
D)  As long as the buyer is not aware of the security interest, purchases the good for his or her personal use, and purchases the good before the secured party files a financial statement, the new buyer obtains the good free of the security interest. 
E)  As long as the buyer is not aware of the security interest, purchases the good for personal use or resale, and purchases good before the secured party files a financial statement, the buyer obtains the good free of the security interest.

Question 15

Collateral is the property that is subject to a security interest.

Accepted Answer

A) True 
 B)False

Question 16

Transfer of collateral to a secured party is called a[n] ____.

Accepted Answer

A)  Allegiant 
B)  Pledge 
C)  Transfer 
D)  Allonge 
E)  Release 
A)  Allegiant 
B)  Pledge 
C)  Transfer 
D)  Allonge 
E)  Release

Question 17

The person who fails to make payments is said to have defaulted on a loan.

Accepted Answer

A) True 
 B)False

Question 18

When ______ occurs,the creditor becomes the secured party who has a security interest in the collateral.

Accepted Answer

A)  Attachment 
B)  Transformation 
C)  Reaffirmation 
D)  Security 
E)  Perfection 
A)  Attachment 
B)  Transformation 
C)  Reaffirmation 
D)  Security 
E)  Perfection

Question 19

Which of the following is false regarding types of collateral?

Accepted Answer

A)  Collateral may include farm products. 
B)  Collateral may include goods such as equipment. 
C)  Collateral may include indispensable paper such as documents of title. 
D)  Collateral may include intangibles such as chattel paper. 
E)  Collateral may include proceeds. 
A)  Collateral may include farm products. 
B)  Collateral may include goods such as equipment. 
C)  Collateral may include indispensable paper such as documents of title. 
D)  Collateral may include intangibles such as chattel paper. 
E)  Collateral may include proceeds.

Question 20

According to the UCC,value is consideration.

Accepted Answer

A) True 
 B)False

Exam 30: Secured Transactions

How long does a debtor have in which to object to a secured party's retention of collateral to satisfy a debt?

Which of the following is true regarding what may constitute collateral?

Set forth the steps that a creditor must take to become a secured party.

A ______ is a person or party that has an obligation to the secured party.

Which of the following is the proper designation under the UCC for the television?

Which of the following is true regarding the court's opinion in Lingross v.Heilig-Meyers Furniture,the case in the text in which the plaintiffs alleged that the defending furniture store's agents engaged in wrongful repossession efforts?

What should the bank have done to terminate its interest in any property of Molly?

Which of the following is true regarding the effect of XYZ Electronics filing a security interest?

Which of the following is true regarding a secured party's interest in proceeds?

Which of the following is defined as the series of legal steps a secured party takes to protect its rights and collateral from other creditors who wish to have their debts returned through the same collateral?

Which of the following is true regarding any compensation that Molly is entitled to from the bank because the bank did not timely file notice that it had no interest in her goods?

Which of the following is the proper designation for any equipment subject to the bank's security interest that Molly obtains after the initial loan agreement?

Which of the following is true if a buyer of a consumer good subject to purchase-money security interest later sells the good?

Collateral is the property that is subject to a security interest.

Transfer of collateral to a secured party is called a[n] ____.

The person who fails to make payments is said to have defaulted on a loan.

When ______ occurs,the creditor becomes the secured party who has a security interest in the collateral.

Which of the following is false regarding types of collateral?

According to the UCC,value is consideration.

An Introduction to Dynamic Business Law

Business Ethics

The Uslegal 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 Illegality

Reality of Assent

Contracts in Writing

Third Party Rights to Contracts

Performance,Breach of Contract,discharge,and Remedies

Introduction to Sales and Lease Contracts

Title,Risk of Loss,and Insurable Interest

Performance and Obligations Under Sales and Lease Contracts

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 Organizations

Partnerships: Nature, Formation, and Operation

Partnerships: Termination and Limited Partnerships

Corporations: Formation and Financing

Corporations: Directors, Officers, and Shareholders

Corporations: Mergers, Consolidations, and Termination

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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