Question 1

A(n)________ is the person or party that has an obligation to the secured party.

Accepted Answer

A) assignor 
B) debtor 
C) maker 
D) creditor 
E) delegator 
A) assignor 
B) debtor 
C) maker 
D) creditor 
E) delegator

Question 2

Claims to Funds.Paul had a great job as a bank executive.Unfortunately,his bank came under scrutiny by federal regulators,and although Paul had done nothing illegal,he ended up being fired.Unfortunately for Paul,he had a number of debts.Among his assets were a house worth $250,000 on which he owed $150,000 to a bank that held a security interest; three vehicles; an expensive watch worth $5,000; and $120,000 in an Individual Retirement Account (IRA).He owed $900 per month in child support to his ex-wife Suzy and was behind on payments in the amount of $1,800.He also owed $2,000 in wages consisting of four months of back pay to Bob who took care of Paul's landscaping needs and swimming pool care.Unable to find a job and believing that he had no other option,Paul filed for Chapter 7 bankruptcy.All creditors angrily demanded payment from liquidation of Paul's assets.Paul,on the other hand,claims that he needs all the above-mentioned assets and that he should not have to give up anything.Only federal bankruptcy exemptions apply to Paul's case.Which of the following is true regarding Paul's claim to his vehicles?

Accepted Answer

A) All vehicles will be sold,with the entire proceeds being used to satisfy claims of creditors. 
B) All vehicles will remain Paul's property because vehicles are automatically exempt. 
C) One vehicle with the least value will remain Paul's property as an exemption,and the others will be sold to satisfy the claims of creditors. 
D) An interest in a motor vehicle up to $3,675 is exempt. 
E) An interest in a motor vehicle up to $5,000 is exempt. 
A) All vehicles will be sold,with the entire proceeds being used to satisfy claims of creditors. 
B) All vehicles will remain Paul's property because vehicles are automatically exempt. 
C) One vehicle with the least value will remain Paul's property as an exemption,and the others will be sold to satisfy the claims of creditors. 
D) An interest in a motor vehicle up to $3,675 is exempt. 
E) An interest in a motor vehicle up to $5,000 is exempt.

Question 3

Which of the following are a type of indispensable paper?

Accepted Answer

A) Fixtures 
B) Documents of title 
C) Accounts 
D) Fixtures,documents of title,and accounts 
E) Fixtures and documents of title,but not accounts 
A) Fixtures 
B) Documents of title 
C) Accounts 
D) Fixtures,documents of title,and accounts 
E) Fixtures and documents of title,but not accounts

Question 4

Under the Uniform Commercial Code,a secured interest is an interest in personal property or fixtures which secures payment or performance of an obligation.

Accepted Answer

A) True 
 B)False

Question 5

What rights,if any,does a creditor who does not wish to repossess collateral have in the event of a default,and why might a creditor prefer a remedy other than repossession of the collateral?

Accepted Answer

Rather than repossessing the collateral,

Question 6

Which of the following are examples of collateral?

Accepted Answer

A) Goods and indispensable paper 
B) Goods and intangibles 
C) Goods and proceeds 
D) Goods,indispensable paper,and proceeds 
E) Goods,indispensable paper,intangibles,and proceeds 
A) Goods and indispensable paper 
B) Goods and intangibles 
C) Goods and proceeds 
D) Goods,indispensable paper,and proceeds 
E) Goods,indispensable paper,intangibles,and proceeds

Question 7

Perfection is a series of legal steps a secured party takes to protect its right in the collateral from other creditors who want their debts satisfied through different collateral.

Accepted Answer

A) True 
 B)False

Question 8

Perfection of a security interest in a motor vehicle generally occurs when the secured party files a financing statement with the Federal Trade Commission (FTC).

Accepted Answer

A) True 
 B)False

Question 9

Everett buys a new bicycle on credit from Bicycle City.Bicycle City has a security agreement for a purchase-money security interest in the bicycle but did not file a financing statement.Everett,however,discovers that he does not have enough money to pay his rent.Therefore,he sells the bicycle to his neighbor,Helen,who is unaware of Bicycle City's security interest in the bicycle.Everett fails to make payments on the bicycle,and Bicycle City seeks to repossess it.Discuss the rights and obligations of the parties.

Accepted Answer

Under the Uniform Commercial Code,so lon

Question 10

The transfer of collateral to a secured party for the purpose of perfection is called a(n)________.

Accepted Answer

A) sole-benefit bailment 
B) pledge 
C) entrustment 
D) allonge 
E) allocation 
A) sole-benefit bailment 
B) pledge 
C) entrustment 
D) allonge 
E) allocation

Question 11

Which of the following is an agreement by which the debtor agrees to pay a debt even though it could be discharged?

Accepted Answer

A) An admission against interest 
B) A reaffirmation agreement 
C) A compromise agreement 
D) An accord and satisfaction 
E) A novation 
A) An admission against interest 
B) A reaffirmation agreement 
C) A compromise agreement 
D) An accord and satisfaction 
E) A novation

Question 12

Which of the following means that bankruptcy relief is ordered and that the bankruptcy proceedings can continue?

Accepted Answer

A) An order of relief 
B) A petition 
C) A declaratory judgment 
D) A temporary injunction 
E) A permanent injunction 
A) An order of relief 
B) A petition 
C) A declaratory judgment 
D) A temporary injunction 
E) A permanent injunction

Question 13

According to the Uniform Commercial Code,a financing statement should include ________.

Accepted Answer

A) the names and addresses of all the parties involved 
B) the names and addresses of all the parties involved and a description of the collateral 
C) the names and addresses of all the parties involved,a description of the collateral,and the signature of the debtor 
D) the name of the financing bank and the name of the debtor,and a description of the collateral 
E) the name of the financing bank,the signature of the debtor,a description of the collateral,and the details of the loan repayment schedule 
A) the names and addresses of all the parties involved 
B) the names and addresses of all the parties involved and a description of the collateral 
C) the names and addresses of all the parties involved,a description of the collateral,and the signature of the debtor 
D) the name of the financing bank and the name of the debtor,and a description of the collateral 
E) the name of the financing bank,the signature of the debtor,a description of the collateral,and the details of the loan repayment schedule

Question 14

Which of the following is a term used in bankruptcy for debtors who cannot pay their debts in a timely fashion?

Accepted Answer

A) Statutory debtors 
B) Insolvent debtors 
C) Financial transients 
D) Financially irresponsible parties (FIPs) 
E) Financially reprehensible parties (FRPs) 
A) Statutory debtors 
B) Insolvent debtors 
C) Financial transients 
D) Financially irresponsible parties (FIPs) 
E) Financially reprehensible parties (FRPs)

Question 15

In a dispute between a secured perfected creditor and a secured unperfected creditor for claim to collateral,the secured perfected creditor would be the prevailing party.

Accepted Answer

A) True 
 B)False

Question 16

The person or party that holds the interest in the secured property is the ________.

Accepted Answer

A) subrogee 
B) assignee 
C) delegatee 
D) secured party 
E) third-party beneficiary 
A) subrogee 
B) assignee 
C) delegatee 
D) secured party 
E) third-party beneficiary

Question 17

If a purchase money security interest (PMSI)is in inventory,the perfected PMSI has priority over a previously perfected non-PMSI if which of the following two conditions are met?

Accepted Answer

A) The PMSI party perfects its interest after the debtor receives his inventory,and the PMSI party checks for previous secured interests and gives written notice to the holders of the PMSI. 
B) The PMSI party perfects its interest before or at the same time that the debtor receives his inventory,and the PMSI party checks for previous secured interests and gives written notice to the holders of the PMSI. 
C) The PMSI party perfects its interest before or after the debtor receives his inventory,and the PMSI party checks for previous secured interests and gives written notice to the holders of the PMSI. 
D) The PMSI party perfects its interest before or at the same time that the debtor receives his inventory,and the PMSI party checks for subsequent secured interests and gives written notice to the holders of the PMSI. 
E) The PMSI party perfects its interest before or at the same time that the debtor receives his inventory,and the PMSI party checks for subsequent secured interests and gives written or oral notice to the holders of the PMSI. 
A) The PMSI party perfects its interest after the debtor receives his inventory,and the PMSI party checks for previous secured interests and gives written notice to the holders of the PMSI. 
B) The PMSI party perfects its interest before or at the same time that the debtor receives his inventory,and the PMSI party checks for previous secured interests and gives written notice to the holders of the PMSI. 
C) The PMSI party perfects its interest before or after the debtor receives his inventory,and the PMSI party checks for previous secured interests and gives written notice to the holders of the PMSI. 
D) The PMSI party perfects its interest before or at the same time that the debtor receives his inventory,and the PMSI party checks for subsequent secured interests and gives written notice to the holders of the PMSI. 
E) The PMSI party perfects its interest before or at the same time that the debtor receives his inventory,and the PMSI party checks for subsequent secured interests and gives written or oral notice to the holders of the PMSI.

Question 18

What is the national standard for perfecting a security interest in an automobile or a boat?

Accepted Answer

A) Perfection by pledge or perfection by filing 
B) Perfection by filing or perfection by possession 
C) Automatic perfection or perfection by possession 
D) Automatic perfection or perfection by filing 
E) No national standard exists for perfecting a security interest in an automobile or a boat. 
A) Perfection by pledge or perfection by filing 
B) Perfection by filing or perfection by possession 
C) Automatic perfection or perfection by possession 
D) Automatic perfection or perfection by filing 
E) No national standard exists for perfecting a security interest in an automobile or a boat.

Question 19

A security interest in a trademark,copyright,or patent is perfected ________.

Accepted Answer

A) automatically 
B) by filing 
C) by possession 
D) by filing or by possession,but not automatically 
E) automatically,by filing,or by possession 
A) automatically 
B) by filing 
C) by possession 
D) by filing or by possession,but not automatically 
E) automatically,by filing,or by possession

Exam 19: Secured Transactions and Bankruptcy

A(n)________ is the person or party that has an obligation to the secured party.

Which of the following are a type of indispensable paper?

Under the Uniform Commercial Code,a secured interest is an interest in personal property or fixtures which secures payment or performance of an obligation.

What rights,if any,does a creditor who does not wish to repossess collateral have in the event of a default,and why might a creditor prefer a remedy other than repossession of the collateral?

Which of the following are examples of collateral?

Perfection is a series of legal steps a secured party takes to protect its right in the collateral from other creditors who want their debts satisfied through different collateral.

Perfection of a security interest in a motor vehicle generally occurs when the secured party files a financing statement with the Federal Trade Commission (FTC).

The transfer of collateral to a secured party for the purpose of perfection is called a(n)________.

Which of the following is an agreement by which the debtor agrees to pay a debt even though it could be discharged?

Which of the following means that bankruptcy relief is ordered and that the bankruptcy proceedings can continue?

According to the Uniform Commercial Code,a financing statement should include ________.

Which of the following is a term used in bankruptcy for debtors who cannot pay their debts in a timely fashion?

In a dispute between a secured perfected creditor and a secured unperfected creditor for claim to collateral,the secured perfected creditor would be the prevailing party.

The person or party that holds the interest in the secured property is the ________.

If a purchase money security interest (PMSI)is in inventory,the perfected PMSI has priority over a previously perfected non-PMSI if which of the following two conditions are met?

What is the national standard for perfecting a security interest in an automobile or a boat?

A security interest in a trademark,copyright,or patent is perfected ________.

An Introduction to the Fundamentals of Dynamic Business Law

Business Ethics and Social Responsibility

The Uslegal System and Alternative Dispute Resolution

Administrative Law

Constitutional Law

Criminal Law and Business

Tort Law

Real, Personal, and Intellectual Property

Introduction to Contracts and Agreement

Consideration

Capacity and Legality

Reality of Assent

Contracts in Writing and Third-Party Contracts

Discharge and Remedies

Formation and Performance of Sales and Lease Contracts

Sales and Lease Contracts: Performance, Warranties, and Remedies

Negotiable Instruments: Negotiability and Transferability

Holder in Due Course, Liability, and Defenses

Agency and Liability to Third Parties

Forms of Business Organization

Corporations: Formation and Organization

Securities Regulation

Employment and Discrimination Law

Consumer Law

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