Question 1

is a writing that demonstrates a right to payment of money.

Accepted Answer

A) An authorization. 
B) An instrument. 
C) Chattel paper. 
D) Goods paper. 
E) Payment paper. 
A) An authorization. 
B) An instrument. 
C) Chattel paper. 
D) Goods paper. 
E) Payment paper.

Question 2

Which of the following is true regarding the manner in which a secured party may sell collateral?

Accepted Answer

A) The sale must be in a public sale only. 
B) The sale must be in an acknowledged sale. 
C) The sale must be in a private sale only. 
D) The sale may be in either a private sale or a public sale. 
E) The sale may be in a private sale,public sale,or an acknowledged sale. 
A) The sale must be in a public sale only. 
B) The sale must be in an acknowledged sale. 
C) The sale must be in a private sale only. 
D) The sale may be in either a private sale or a public sale. 
E) The sale may be in a private sale,public sale,or an acknowledged sale.

Question 3

________ is defined as the series of legal steps taken by a secured party to protect its rights in the collateral from other creditors who wish to have their debts satisfied through the same collateral.

Accepted Answer

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

Question 4

If Michael,ABC Electronics,and XYZ Credit have a dispute regarding entitlement to the television,who is likely to win and why?

Accepted Answer

A) XYZ Credit will prevail because although ABC Electronics had a perfected security interest,it did not file a financing statement. 
B) ABC Electronics will prevail because,as a seller of consumer goods,it did not need a perfected security interest in order to prevail against other creditors. 
C) ABC Electronics will prevail because it had a perfected security interest. 
D) XYZ Credit will prevail because it had a perfected security interest in a greater amount of goods than did ABC Electronics. 
E) XYZ Credit will prevail because a luxury good was involved and,although ABC Electronics had a perfected security interest,it did not file a financing statement as required within 10 days of the sale. 
A) XYZ Credit will prevail because although ABC Electronics had a perfected security interest,it did not file a financing statement. 
B) ABC Electronics will prevail because,as a seller of consumer goods,it did not need a perfected security interest in order to prevail against other creditors. 
C) ABC Electronics will prevail because it had a perfected security interest. 
D) XYZ Credit will prevail because it had a perfected security interest in a greater amount of goods than did ABC Electronics. 
E) XYZ Credit will prevail because a luxury good was involved and,although ABC Electronics had a perfected security interest,it did not file a financing statement as required within 10 days of the sale.

Question 5

Which of these UCC articles governs secured transactions in personal property?

Accepted Answer

A) Article 9. 
B) Article 1. 
C) Article 7. 
D) Article 4. 
E) Article 5. 
A) Article 9. 
B) Article 1. 
C) Article 7. 
D) Article 4. 
E) Article 5.

Question 6

[Dirty Laundry] Morgan planned to start her own laundry business.She borrowed $60,000 from ABC Bank.She used her car and home as collateral and also gave ABC Bank an interest in any property she acquired after the security interest was made.The bank perfected its interest.Morgan purchased a new computer from XYZ Electronics for use in her business.XYZ obtained a purchase money security interest on the computer.Morgan was having problems with cash flow and failed to make payments to XYZ Electronics on the new computer.After the sale and before Morgan stopped making payments,XYZ had filed a financing statement.The electronics store sought to repossess the computer,but the bank opposed that.Morgan's business picked up and she was able to completely repay her loan to the bank and to XYZ.She requested that the bank discontinue its security interest,but the bank did not do so as requested by Morgan,and still had not done so 45 days after Morgan had paid off the loan and requested that the bank terminate its interest.
-________ property is the proper designation for any equipment subject to the bank's security interest that Morgan obtains after the initial loan agreement.

Accepted Answer

A) Valid 
B) Cover 
C) Post-dated 
D) After-acquired 
E) Post-security 
A) Valid 
B) Cover 
C) Post-dated 
D) After-acquired 
E) Post-security

Question 7

What is the likely effect on perfection when a financing statement is filed under an incorrect name?

Accepted Answer

A) Perfection is effective if the secured party's name is incorrect,but not if the debtor's name is incorrect. 
B) Perfection is effective if the error involves the name of a corporation,but not if the error involves the name of an individual. 
C) The perfection is likely not effective. 
D) Perfection is effective if the debtor's name is incorrect,but not if the secured party's name is incorrect. 
E) There is usually no effect on perfection. 
A) Perfection is effective if the secured party's name is incorrect,but not if the debtor's name is incorrect. 
B) Perfection is effective if the error involves the name of a corporation,but not if the error involves the name of an individual. 
C) The perfection is likely not effective. 
D) Perfection is effective if the debtor's name is incorrect,but not if the secured party's name is incorrect. 
E) There is usually no effect on perfection.

Question 8

[Favi's Furniture] Favi took out a loan from First Bank and executed a security agreement which gave First Bank rights to any after-acquired property as collateral.A year later,Favi took out a loan with Second Bank and executed a security agreement with Second Bank using his new delivery truck as collateral.Favi eventually defaulted on both loans.
-Which creditor has rights to Favi's delivery truck as collateral?

Accepted Answer

A) First Bank,because in a dispute between a secured perfected creditor and a secured unperfected creditor,the secured perfected creditor takes priority. 
B) Second Bank,because "after-acquired property" is not specific enough to grant attachment right to First Bank,and,thus,the secured agreement of Second Bank takes priority. 
C) The two banks will have equal rights to the property. 
D) First Bank,because in a dispute between two secured and perfected creditors,the party who perfected first takes priority. 
E) First Bank,because in a dispute between two secured but unperfected creditors,the party who attached first takes priority. 
A) First Bank,because in a dispute between a secured perfected creditor and a secured unperfected creditor,the secured perfected creditor takes priority. 
B) Second Bank,because "after-acquired property" is not specific enough to grant attachment right to First Bank,and,thus,the secured agreement of Second Bank takes priority. 
C) The two banks will have equal rights to the property. 
D) First Bank,because in a dispute between two secured and perfected creditors,the party who perfected first takes priority. 
E) First Bank,because in a dispute between two secured but unperfected creditors,the party who attached first takes priority.

Question 9

[Hang Glider] Monte borrows money from A&Z Bank and the bank has a secured interest in Monte's hang glider.The bank files a financing statement which identifies Dryden,another debtor of the bank,as the debtor for this transaction.Monte also borrows money from his neighbor,and he uses the hang glider as collateral on that transaction.His neighbor was unaware that Monte had used the hang glider as collateral for the bank loan.Monte fails to make his payment to the bank.The bank claims it should take possession of the hang glider because it has a perfected interest.When Dryden learns about the bank's interest in the hang glider,he calls that bank and tells them he has first dibs on the hang glider because their loan to Monte was not public knowledge.The bank tells Dryden that they have priority because they perfected their security interest in the hang glider when they filed the financing statement four years ago.
-Is Dryden correct that the bank does not have priority because the loan was not public knowledge?

Accepted Answer

A) No,once the financing statement is filed,the statement becomes public knowledge and parties considering making a loan to another party are expected to search for notification of secured interests. 
B) Yes,although financial statements become public knowledge,only banks and businesses,but not private persons,are expected to search for notification of secured interests. 
C) No,although financial statements are generally not considered public knowledge,private persons are expected to search for notification of secured interests. 
D) Yes,financial statements are not generally considered public knowledge. 
E) Yes,private persons should not be expected to search for notification of secured interests. 
A) No,once the financing statement is filed,the statement becomes public knowledge and parties considering making a loan to another party are expected to search for notification of secured interests. 
B) Yes,although financial statements become public knowledge,only banks and businesses,but not private persons,are expected to search for notification of secured interests. 
C) No,although financial statements are generally not considered public knowledge,private persons are expected to search for notification of secured interests. 
D) Yes,financial statements are not generally considered public knowledge. 
E) Yes,private persons should not be expected to search for notification of secured interests.

Question 10

When a debtor sells collateral,he or she receives ________,something that is exchanged for collateral.

Accepted Answer

A) After-acquired property 
B) Subsequent-acquired property 
C) Proceeds 
D) Post-financed funds 
E) Collateral 
A) After-acquired property 
B) Subsequent-acquired property 
C) Proceeds 
D) Post-financed funds 
E) Collateral

Question 11

Perfection of a security interest in a motor vehicle generally occurs when the secured party files the interest with the state's Department of Motor Vehicles.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is true regarding the court's opinion in Price Auto Sales,Inc.v.Sanders,the case in the text in which a debtor sued an auto company for injuries sustained during an attempt to repossess his automobile?

Accepted Answer

A) The court ruled that the debtor had no right to protest the repossession. 
B) The court ruled that,because repossession had been completed,there could be no breach of the peace as a matter of law. 
C) The court ruled that repossession was not completed and that a breach of the peace occurred in the process of the repossession. 
D) The court ruled that once repossession is complete,it is not relevant whether or not a breach of the peace occurred. 
E) The court ruled that a debtor's protest does not affect whether or not repossession is complete,and it is not relevant to whether or not a breach of the peace occurred 
A) The court ruled that the debtor had no right to protest the repossession. 
B) The court ruled that,because repossession had been completed,there could be no breach of the peace as a matter of law. 
C) The court ruled that repossession was not completed and that a breach of the peace occurred in the process of the repossession. 
D) The court ruled that once repossession is complete,it is not relevant whether or not a breach of the peace occurred. 
E) The court ruled that a debtor's protest does not affect whether or not repossession is complete,and it is not relevant to whether or not a breach of the peace occurred

Question 13

The party that perfects its interest in collateral has first claim,when two parties have an interest in the same collateral.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is the designation for property acquired by the debtor after a security agreement covering the property is made?

Accepted Answer

A) Subsequently acquired property. 
B) After-acquired property. 
C) Post-acquired property. 
D) Proceeds. 
E) Post-dated property. 
A) Subsequently acquired property. 
B) After-acquired property. 
C) Post-acquired property. 
D) Proceeds. 
E) Post-dated property.

Question 15

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

Accepted Answer

A) A transaction party. 
B) A secured party. 
C) A debtor. 
D) An attached party. 
E) An approved party. 
A) A transaction party. 
B) A secured party. 
C) A debtor. 
D) An attached party. 
E) An approved party.

Question 16

When a debtor uses collateral to secure a loan from a bank,a purchase-money security interest is created.

Accepted Answer

A) True 
 B)False

Question 17

Which statement is correct regarding priority in rights to the computer?

Accepted Answer

A) XYZ Electronics had priority only if XYZ Electronics perfected its security interest within 10 days of the purchase. 
B) XYZ Electronics had priority only if XYZ Electronics perfected its security interest within 20 days of the purchase. 
C) The bank had a security interest in the computer because it perfected its security interest before XYZ Electronics did so. 
D) The bank had priority because the computer was considered after-acquired property properly covered by the initial security interest. 
E) XYZ Electronics had priority because XYZ Electronics had a purchase-money security interest in the computer. 
A) XYZ Electronics had priority only if XYZ Electronics perfected its security interest within 10 days of the purchase. 
B) XYZ Electronics had priority only if XYZ Electronics perfected its security interest within 20 days of the purchase. 
C) The bank had a security interest in the computer because it perfected its security interest before XYZ Electronics did so. 
D) The bank had priority because the computer was considered after-acquired property properly covered by the initial security interest. 
E) XYZ Electronics had priority because XYZ Electronics had a purchase-money security interest in the computer.

Question 18

[Overextended Debtor] Michael bought a flat screen television for his living room from ABC Electronics,and financed the purchase through ABC Electronics.Later,Michael bought a boat,a new car,and an expensive engagement ring for his girlfriend,and found he was unable to continue making payments on the television.The manager of ABC Electronics called 60 days after the sale and asked Michael to return the television.Michael refused on the basis that ABC Electronics never perfected its interest in the television.He also explained that he had later granted a secured interest in the television along with his other goods to XYZ Credit in return for a loan.No financing statement was filed on behalf of ABC Electronics although XYZ Credit,with no knowledge of any interest of ABC Electronics,did file a financing statement.
-What is the proper designation for the television,under the UCC?

Accepted Answer

A) It is unsecured property 
B) It is a consumer good 
C) It is an allonge 
D) It is a pledge 
E) It is equipment 
A) It is unsecured property 
B) It is a consumer good 
C) It is an allonge 
D) It is a pledge 
E) It is equipment

Question 19

A transaction in which the payment of a debt is guaranteed by personal property owned by the debtor is an)________.

Accepted Answer

A) Guaranteed debt 
B) Effected transaction 
C) Approved guarantee 
D) Secured transaction 
E) Approved transfer 
A) Guaranteed debt 
B) Effected transaction 
C) Approved guarantee 
D) Secured transaction 
E) Approved transfer

Question 20

Which statement is correct about the creation of a security interest?

Accepted Answer

A) The secured party must give a consumer good to get the security agreement. 
B) A written agreement is necessary to create a security interest. 
C) The secured party must be a bank. 
D) To create a security interest,either a written agreement is necessary or the secured party is in possession of the collateral. 
E) The debtor has no actual rights to the collateral until final payment is made. 
A) The secured party must give a consumer good to get the security agreement. 
B) A written agreement is necessary to create a security interest. 
C) The secured party must be a bank. 
D) To create a security interest,either a written agreement is necessary or the secured party is in possession of the collateral. 
E) The debtor has no actual rights to the collateral until final payment is made.

Exam 30: Secured Transactions

is a writing that demonstrates a right to payment of money.

Which of the following is true regarding the manner in which a secured party may sell collateral?

________ is defined as the series of legal steps taken by a secured party to protect its rights in the collateral from other creditors who wish to have their debts satisfied through the same collateral.

If Michael,ABC Electronics,and XYZ Credit have a dispute regarding entitlement to the television,who is likely to win and why?

Which of these UCC articles governs secured transactions in personal property?

What is the likely effect on perfection when a financing statement is filed under an incorrect name?

When a debtor sells collateral,he or she receives ________,something that is exchanged for collateral.

Perfection of a security interest in a motor vehicle generally occurs when the secured party files the interest with the state's Department of Motor Vehicles.

Which of the following is true regarding the court's opinion in Price Auto Sales,Inc.v.Sanders,the case in the text in which a debtor sued an auto company for injuries sustained during an attempt to repossess his automobile?

The party that perfects its interest in collateral has first claim,when two parties have an interest in the same collateral.

Which of the following is the designation for property acquired by the debtor after a security agreement covering the property is made?

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

When a debtor uses collateral to secure a loan from a bank,a purchase-money security interest is created.

Which statement is correct regarding priority in rights to the computer?

A transaction in which the payment of a debt is guaranteed by personal property owned by the debtor is an)________.

Which statement is correct about the creation of a security interest?

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 Legality

Legal Assent

Contracts in Writing

Third-Party Rights to Contracts

Discharge and Remedies

Introduction to Sales and Lease Contracts

Title,risk of Loss,and Insurable Interest

Performance and Obligations Under Sales and Leases

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 Organization

Partnerships: Nature, formation, and Operation

Partnerships: Termination and Limited Partnerships

Corporations: Formation and Financing

Corporations: Directors, officers, and Shareholders

Corporations: Mergers, consolidations, terminations

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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