Question 1

Joan borrows money from Jake under a security agreement. After borrowing the money, Joan buys a new kayak. The kayak is considered

Accepted Answer

A)  a floating lien. 
B)  after-acquired property. 
C)  a future advance. 
D)  proceeds. 
A)  a floating lien. 
B)  after-acquired property. 
C)  a future advance. 
D)  proceeds.

Question 2

Super Discount Store sells goods to consumers and businesses in several states in the Midwest. Most of the goods are sold on credit. Super Discount often takes a security interest with the goods as collateral. The state in which a financing statement should be filed depends on the location of

Accepted Answer

A)  the debtor. 
B)  the collateral. 
C)  the store in which the goods were sold. 
D)  the place from which Super Discount manages its operations. 
A)  the debtor. 
B)  the collateral. 
C)  the store in which the goods were sold. 
D)  the place from which Super Discount manages its operations.

Question 3

Pizza Now!, a delivery, dine-in, or takeout restaurant, buys a delivery vehicle on credit from Quality Auto & Truck Dealers Corporation, but does not make a payment on the loan for sev?eral months. Quality Auto repossesses the vehicle by towing it from a pub?lic street. Pizza Now! sues Quality Auto for breach of the peace. Pizza Now! will probably

Accepted Answer

A)  not prevail, because Quality Auto did not use judicial process. 
B)  not prevail, because the repossession was not a breach of the peace. 
C)  prevail, because Pizza Now! did not default on the loan. 
D)  prevail, because the repossession was a breach of the peace. 
A)  not prevail, because Quality Auto did not use judicial process. 
B)  not prevail, because the repossession was not a breach of the peace. 
C)  prevail, because Pizza Now! did not default on the loan. 
D)  prevail, because the repossession was a breach of the peace.

Question 4

Town Loan Center agrees to loan Sara $1,500, accepting as collateral her car. They put their agreement in writing and sign it. Sara keeps possession of the car. Does Town Loan have an enforceable security interest? How can Town Loan let other creditors know of its interest in the car?

Accepted Answer

The three requirements for an enforceabl

Question 5

The UCC requires that a financing statement be filed under the name of the creditor.

Accepted Answer

A) True 
 B)False

Question 6

Perfection is usually accomplished without filing a financing statement.

Accepted Answer

A) True 
 B)False

Question 7

For a creditor to have an enforceable security interest, the debtor must have rights in the collateral.

Accepted Answer

A) True 
 B)False

Question 8

Home2U Stores, Inc., sells household consumer goods. To create a pur?chase-money security interest, Home2U must

Accepted Answer

A)  assign, to a collecting agent, a portion of its accounts payable. 
B)  assign, to a collecting agent, a portion of its accounts receivable. 
C)  extend credit for part or all of the purchase price of the goods. 
D)  refer purchasers to a third-party lender. 
A)  assign, to a collecting agent, a portion of its accounts payable. 
B)  assign, to a collecting agent, a portion of its accounts receivable. 
C)  extend credit for part or all of the purchase price of the goods. 
D)  refer purchasers to a third-party lender.

Question 9

On default, a secured party who chooses not to retain the collateral must dispose of it in a commercially reasonable manner.

Accepted Answer

A) True 
 B)False

Question 10

When more than one party claims an interest in the same collateral, a perfected secured party's interest has priority over the interest of most other parties.

Accepted Answer

A) True 
 B)False

Question 11

A buyer in the ordinary course of business takes the goods free from any security interest created by the seller unless the security interest is perfected.

Accepted Answer

A) True 
 B)False

Question 12

Digital Devices is a retail seller of entertainment media. Digital Devices sells a 3D HD TV set to Edmund. Edmund cannot pay cash, so he signs a security agreement, paying a certain amount down and agreeing to pay the balance in twelve equal installments. The security agreement gives Digital Devices a security interest in the set. Edmund makes six payments on time then goes into default because of unexpected financial problems. Digital Devices repossesses the set. Can the creditor keep it in full satisfaction of the debt? Explain.

Accepted Answer

Generally, under Article 9, a secured pa

Question 13

Authentication means to sign, execute, or adopt any symbol on an electronic record that verifies that the person signing has the intent to adopt or accept the record.

Accepted Answer

A) True 
 B)False

Question 14

Either the security agreement or the financing statement-but not both-must describe the collateral in which the secured party has a security interest.

Accepted Answer

A) True 
 B)False

Question 15

In general, it is sufficient to provide only the debtor's trade name (or fictitious name) in a financing statement for perfection.

Accepted Answer

A) True 
 B)False

Question 16

Proceeds from the disposition of collateral after default are distributed in a certain order with any surplus generally going to the debtor.

Accepted Answer

A) True 
 B)False

Question 17

The payment of Olinda's debt to Pari is guaranteed by Olinda's personal property. Pari is most likely to perfect her interest by

Accepted Answer

A)  insuring Olinda's property for the full amount of its value. 
B)  calculating the precise amount of Olinda's debt. 
C)  correcting grammatical errors in the parties' written agreement. 
D)  filing a financing statement with the appropriate authority. 
A)  insuring Olinda's property for the full amount of its value. 
B)  calculating the precise amount of Olinda's debt. 
C)  correcting grammatical errors in the parties' written agreement. 
D)  filing a financing statement with the appropriate authority.

Question 18

A-One Loans, Inc., holds a security interest in kitchen and restaurant equipment owned by Brunch n' Lunch Bistro. A-One assigns its interest in the equipment to Commercial Investments Corporation. Commercial Investments becomes the secured party of record

Accepted Answer

A)  automatically. 
B)  if A-One advises Brunch n' Lunch of the assignment. 
C)  if Commercial Investments advises Brunch n' Lunch of the assignment. 
D)  if Commercial Investments files a uniform amendment form. 
A)  automatically. 
B)  if A-One advises Brunch n' Lunch of the assignment. 
C)  if Commercial Investments advises Brunch n' Lunch of the assignment. 
D)  if Commercial Investments files a uniform amendment form.

Question 19

Janet is the secured party in a secured transaction with Michelle. Janet could also be referred to as the

Accepted Answer

A)  debtor. 
B)  secured creditor. 
C)  collateral. 
D)  filing officer. 
A)  debtor. 
B)  secured creditor. 
C)  collateral. 
D)  filing officer.

Question 20

The rights and remedies of secured parties are not cumulative-if a creditor is unsuccessful in enforcing rights by one method, he or she cannot pursue another method.

Accepted Answer

A) True 
 B)False

Exam 30: Secured Transactions

Joan borrows money from Jake under a security agreement. After borrowing the money, Joan buys a new kayak. The kayak is considered

Super Discount Store sells goods to consumers and businesses in several states in the Midwest. Most of the goods are sold on credit. Super Discount often takes a security interest with the goods as collateral. The state in which a financing statement should be filed depends on the location of

Town Loan Center agrees to loan Sara $1,500, accepting as collateral her car. They put their agreement in writing and sign it. Sara keeps possession of the car. Does Town Loan have an enforceable security interest? How can Town Loan let other creditors know of its interest in the car?

The UCC requires that a financing statement be filed under the name of the creditor.

Perfection is usually accomplished without filing a financing statement.

For a creditor to have an enforceable security interest, the debtor must have rights in the collateral.

Home2U Stores, Inc., sells household consumer goods. To create a pur?chase-money security interest, Home2U must

On default, a secured party who chooses not to retain the collateral must dispose of it in a commercially reasonable manner.

When more than one party claims an interest in the same collateral, a perfected secured party's interest has priority over the interest of most other parties.

A buyer in the ordinary course of business takes the goods free from any security interest created by the seller unless the security interest is perfected.

Authentication means to sign, execute, or adopt any symbol on an electronic record that verifies that the person signing has the intent to adopt or accept the record.

Either the security agreement or the financing statement-but not both-must describe the collateral in which the secured party has a security interest.

In general, it is sufficient to provide only the debtor's trade name (or fictitious name) in a financing statement for perfection.

Proceeds from the disposition of collateral after default are distributed in a certain order with any surplus generally going to the debtor.

The payment of Olinda's debt to Pari is guaranteed by Olinda's personal property. Pari is most likely to perfect her interest by

A-One Loans, Inc., holds a security interest in kitchen and restaurant equipment owned by Brunch n' Lunch Bistro. A-One assigns its interest in the equipment to Commercial Investments Corporation. Commercial Investments becomes the secured party of record

Janet is the secured party in a secured transaction with Michelle. Janet could also be referred to as the

The rights and remedies of secured parties are not cumulative-if a creditor is unsuccessful in enforcing rights by one method, he or she cannot pursue another method.

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