Question 1

A(n)_____ surety is a person who acts as a surety without compensation,such as a friend who cosigns a note as a favor.

Accepted Answer

A)  obligatory 
B)  benefactor 
C)  accommodation 
D)  subrogated 
A)  obligatory 
B)  benefactor 
C)  accommodation 
D)  subrogated

Question 2

Bob borrowed $200,000 from ABC Bank to purchase his residential house.A mortgage was used as the financing vehicle.Several years later Bob encountered financial difficulties.He did not pay his mortgage payments for 4 months and the bank foreclosed.At that time the remaining loan balance was $170,000.Bob had not maintained the property well,and the winning bid at the foreclosure auction sale was only $150,000.Is Bob liable for the $20,000 deficiency that has resulted (using the majority rule)?

Accepted Answer

A)  No,because the property was his residence. 
B)  No,because there is no guarantor with secondary liability involved in this transaction. 
C)  Yes,because the proceeds of sale did not satisfy the remaining loan balance. 
D)  Yes,because there is no surety or guarantor involved in this transaction. 
A)  No,because the property was his residence. 
B)  No,because there is no guarantor with secondary liability involved in this transaction. 
C)  Yes,because the proceeds of sale did not satisfy the remaining loan balance. 
D)  Yes,because there is no surety or guarantor involved in this transaction.

Question 3

A difference between a surety and a guarantor is that the guarantors:

Accepted Answer

A)  must be paid for their services. 
B)  should enter into a deed of trust with the creditors. 
C)  should keep a collateral with the creditors. 
D)  become liable only if the principal debtor first defaults. 
A)  must be paid for their services. 
B)  should enter into a deed of trust with the creditors. 
C)  should keep a collateral with the creditors. 
D)  become liable only if the principal debtor first defaults.

Question 4

Chica,a women's fashion retailer,buys merchandise from Tammy,a fashion designer,promising to pay for the merchandise within 30 days after receipt.This is an example of an unsecured credit transaction.

Accepted Answer

A) True 
 B)False

Question 5

A surety is a person who is liable for the payment of another person's debt.

Accepted Answer

A) True 
 B)False

Question 6

An artisan who makes an improvement on a personal property is given a _____ on it until he is paid.

Accepted Answer

A)  lien 
B)  warranty 
C)  guaranty 
D)  credit 
A)  lien 
B)  warranty 
C)  guaranty 
D)  credit

Question 7

Abby borrows money from Cain Bank and Baker cosigns on the loan contract.Abby fails to repay this loan and Cain Bank collects the debt from Baker.Baker is entitled to recover the amount he paid to the bank from Abby.This is known as the:

Accepted Answer

A)  right of subrogation. 
B)  right of return. 
C)  right of reimbursement. 
D)  right of garnishment. 
A)  right of subrogation. 
B)  right of return. 
C)  right of reimbursement. 
D)  right of garnishment.

Question 8

A software engineer installs new software in Dick's computer and returns the computer to Dick.Dick defaults in his payments for the new software.The software engineer loses his right of lien because:

Accepted Answer

A)  this kind of service is not covered under statutory liens. 
B)  there is no surety or guarantor involved in the transaction. 
C)  he has given the computer voluntarily without asking for any consideration. 
D)  the computer rightfully belongs to Dick. 
A)  this kind of service is not covered under statutory liens. 
B)  there is no surety or guarantor involved in the transaction. 
C)  he has given the computer voluntarily without asking for any consideration. 
D)  the computer rightfully belongs to Dick.

Question 9

Which of the following statements is true regarding an accommodation surety?

Accepted Answer

A)  An accommodation surety must provide adequate collateral to the creditor. 
B)  An accommodation surety is usually a professional such as a bonding company,who is paid for serving as a surety. 
C)  An accommodation surety receives relatively more protection from courts. 
D)  An accommodation surety is secondarily liable for the payment of the debt. 
A)  An accommodation surety must provide adequate collateral to the creditor. 
B)  An accommodation surety is usually a professional such as a bonding company,who is paid for serving as a surety. 
C)  An accommodation surety receives relatively more protection from courts. 
D)  An accommodation surety is secondarily liable for the payment of the debt.

Question 10

Tina cosigns a promissory note at Globe Bank for $500 for her friend Tom.Tom defaults on the loan,and Globe Bank collects $500 from Tina.Tina then collects $500 from Tom.Tina could collect money from Tom because of her right of _____.

Accepted Answer

A)  subrogation 
B)  reimbursement 
C)  contribution 
D)  attachment 
A)  subrogation 
B)  reimbursement 
C)  contribution 
D)  attachment

Question 11

John receives certain goods from Tom.He promises to pay Tom later.This transaction is based on a(n)_____.

Accepted Answer

A)  deed of trust 
B)  unsecured credit 
C)  mortgage 
D)  subrogation 
A)  deed of trust 
B)  unsecured credit 
C)  mortgage 
D)  subrogation

Question 12

In the case of _____,after the foreclosure,the proceeds of the sale are applied to the payment of the mortgage debt,and any surplus is paid over to the mortgagor.

Accepted Answer

A)  strict foreclosure 
B)  foreclosure by action and sale 
C)  accommodative foreclosure 
D)  foreclosure by redemption 
A)  strict foreclosure 
B)  foreclosure by action and sale 
C)  accommodative foreclosure 
D)  foreclosure by redemption

Question 13

In the case of _____,the right must be expressly conferred on the mortgagee by the terms of the mortgage.

Accepted Answer

A)  foreclosure by action and sale 
B)  strict foreclosure 
C)  accommodative foreclosure 
D)  foreclosure by power of sale 
A)  foreclosure by action and sale 
B)  strict foreclosure 
C)  accommodative foreclosure 
D)  foreclosure by power of sale

Question 14

As a condition of giving Doyle a thirty-year loan for $100,000,the Caldwell Bank requires that Doyle procure a surety.Doyle pays Sal $5000 to serve in this role.Later,Doyle and the bank make a binding contract to extend the term of the debt from thirty years to thirty years and three months.Will this change discharge Sal from his obligation? Make no assumptions except those stated here.

Accepted Answer

It is very unlikely that this change wou

Question 15

A(n)_____ is secondarily liable for the debt of the principal debtor.

Accepted Answer

A)  surety 
B)  guarantor 
C)  beneficiary 
D)  executor 
A)  surety 
B)  guarantor 
C)  beneficiary 
D)  executor

Question 16

Which of the following is an essential element of a lien?

Accepted Answer

A)  Presence of a written deed of trust. 
B)  Presence of guarantor for the payment of an artisan's service. 
C)  Creation of a debt by the improvement or the provision of services concerning the goods. 
D)  Presence of an accommodation surety who voluntarily accepts the duty of the surety. 
A)  Presence of a written deed of trust. 
B)  Presence of guarantor for the payment of an artisan's service. 
C)  Creation of a debt by the improvement or the provision of services concerning the goods. 
D)  Presence of an accommodation surety who voluntarily accepts the duty of the surety.

Question 17

Submaterialmen are entitled to a lien only when:

Accepted Answer

A)  they enter into a deed of trust with the contractor. 
B)  they act as the surety in the transaction. 
C)  they execute their right of exoneration. 
D)  the state statute specifically includes them. 
A)  they enter into a deed of trust with the contractor. 
B)  they act as the surety in the transaction. 
C)  they execute their right of exoneration. 
D)  the state statute specifically includes them.

Question 18

An unsecured credit transaction involves the greatest benefit to the creditor.

Accepted Answer

A) True 
 B)False

Question 19

Generally,the procedure for declaring a forfeiture and recovering property sold on a land contract is simpler and less time-consuming than foreclosure of a mortgage.

Accepted Answer

A) True 
 B)False

Question 20

What Article of the UCC deals with liens,both carriers and warehousemen?

Accepted Answer

A)  Article 2 
B)  Article 7 
C)  Article 3 
D)  Article 1 
A)  Article 2 
B)  Article 7 
C)  Article 3 
D)  Article 1

Exam 28: Introduction to Credit and Secured Transactions

A(n)_____ surety is a person who acts as a surety without compensation,such as a friend who cosigns a note as a favor.

A difference between a surety and a guarantor is that the guarantors:

Chica,a women's fashion retailer,buys merchandise from Tammy,a fashion designer,promising to pay for the merchandise within 30 days after receipt.This is an example of an unsecured credit transaction.

A surety is a person who is liable for the payment of another person's debt.

An artisan who makes an improvement on a personal property is given a _____ on it until he is paid.

Abby borrows money from Cain Bank and Baker cosigns on the loan contract.Abby fails to repay this loan and Cain Bank collects the debt from Baker.Baker is entitled to recover the amount he paid to the bank from Abby.This is known as the:

A software engineer installs new software in Dick's computer and returns the computer to Dick.Dick defaults in his payments for the new software.The software engineer loses his right of lien because:

Which of the following statements is true regarding an accommodation surety?

Tina cosigns a promissory note at Globe Bank for $500 for her friend Tom.Tom defaults on the loan,and Globe Bank collects $500 from Tina.Tina then collects $500 from Tom.Tina could collect money from Tom because of her right of _____.

John receives certain goods from Tom.He promises to pay Tom later.This transaction is based on a(n)_____.

In the case of _____,after the foreclosure,the proceeds of the sale are applied to the payment of the mortgage debt,and any surplus is paid over to the mortgagor.

In the case of _____,the right must be expressly conferred on the mortgagee by the terms of the mortgage.

A(n)_____ is secondarily liable for the debt of the principal debtor.

Which of the following is an essential element of a lien?

Submaterialmen are entitled to a lien only when:

An unsecured credit transaction involves the greatest benefit to the creditor.

Generally,the procedure for declaring a forfeiture and recovering property sold on a land contract is simpler and less time-consuming than foreclosure of a mortgage.

What Article of the UCC deals with liens,both carriers and warehousemen?

The Nature of Law

The Resolution of Private Disputes

Business and the Constitution

Business Ethics, Corporate Social Responsibility, Corporate Governance, and Critical Thinking

Criminal Law and Procedure

Intentional Torts

Negligence and Strict Liability

Intellectual Property and Unfair Competition

Introduction to Contracts

The Agreement: Offer

The Agreement: Acceptance

Consideration

Reality of Consent

Capacity to Contract

Illegality

Writing

Rights of Third Parties

Performance and Remedies

Formation and Terms of Sales Contracts

Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance Law

Security Interests in Personal Property

Bankruptcy

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Transfers

The Agency Relationship

Third-Party Relations of the Principal and the Agent

Introduction to Forms of Business and Formation of Partnerships

Operation of Partnerships and Related Forms

Partners Dissociation and Partnerships Dissolution and Winding up

Limited Liability Companies, Limited Partnerships, and Limited Liability Limited Partnerships

History and Nature of Corporations

Organization and Financial Structure of Corporations

Management of Corporations

Shareholders Rights and Liabilities

Securities Regulation

Legal and Professional Responsibilities of Auditors, Consultants, and Securities Professionals

Administrative Law

The Federal Trade Commission Act and Consumer Protection Laws

Antitrust: the Sherman Act

The Clayton Act, the Robinson-Patman Act, and Antitrust Exemptions and Immunities

Employment Law

Environmental Regulation

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