Question 1

Which of the following statements best defines a surety?

Accepted Answer

A)  A person who is liable for the performance of another person's duty 
B)  A person who is not liable for the payment of a principal's debts 
C)  A person who makes a separate promise to be liable for the payment of a principal's debts 
D)  A person who is not entitled to be reimbursed by the principal 
A)  A person who is liable for the performance of another person's duty 
B)  A person who is not liable for the payment of a principal's debts 
C)  A person who makes a separate promise to be liable for the payment of a principal's debts 
D)  A person who is not entitled to be reimbursed by the principal

Question 2

The rights and liabilities of the surety and the guarantor are substantially different.

Accepted Answer

A) True 
 B)False

Question 3

Each state has a statute that permits persons who contract to furnish labor or materials to improve real estate to claim a lien on the property until they are paid.

Accepted Answer

A) True 
 B)False

Question 4

In a deed of trust transaction, when a trustee sells the property and the proceeds generate a surplus, it _____.

Accepted Answer

A)  is paid to the borrower 
B)  is paid to the lender 
C)  is paid to the trustee 
D)  goes to the state 
A)  is paid to the borrower 
B)  is paid to the lender 
C)  is paid to the trustee 
D)  goes to the state

Question 5

The provider of materials or labor is not entitled to a lien if the:

Accepted Answer

A)  property is a public property. 
B)  materials are provided without reference to a particular property. 
C)  materialman is not a general contractor. 
D)  property is under a land sales contract or mortgage. 
A)  property is a public property. 
B)  materials are provided without reference to a particular property. 
C)  materialman is not a general contractor. 
D)  property is under a land sales contract or mortgage.

Question 6

In a deed of trust transaction, when a trustee sells the property and the proceeds generate a deficiency, the _____.

Accepted Answer

A)  borrower is relieved of all obligations to the lender 
B)  lender may sue the borrower on the debt and recover a judgment 
C)  lender may sue the trustee 
D)  trustee may sue the borrower 
A)  borrower is relieved of all obligations to the lender 
B)  lender may sue the borrower on the debt and recover a judgment 
C)  lender may sue the trustee 
D)  trustee may sue the borrower

Question 7

If mortgagors sell the interest in their property without the consent of the mortgagee, _____.

Accepted Answer

A)  they have acted illegally 
B)  the sale does not affect the mortgagee's interest in the property 
C)  the mortgagee will lose his or her interest in the property 
D)  the mortgagee will lose all claims against the mortgagor 
A)  they have acted illegally 
B)  the sale does not affect the mortgagee's interest in the property 
C)  the mortgagee will lose his or her interest in the property 
D)  the mortgagee will lose all claims against the mortgagor

Question 8

Which of the following statements is true of accommodation sureties?

Accepted Answer

A)  They are people paid for serving as a surety. 
B)  They are protected by the courts at a higher level than other types of sureties. 
C)  They must show that they will be harmed by an extension of time before they are relieved of responsibility. 
D)  They are professional companies that take payment for acting as a surety. 
A)  They are people paid for serving as a surety. 
B)  They are protected by the courts at a higher level than other types of sureties. 
C)  They must show that they will be harmed by an extension of time before they are relieved of responsibility. 
D)  They are professional companies that take payment for acting as a surety.

Question 9

If the surety has to perform the principal's obligation, then the surety acquires all the rights that the creditor had against the principal. This is known as the surety's right _____.

Accepted Answer

A)  to contribution 
B)  of subrogation 
C)  to compensation 
D)  to reimbursement 
A)  to contribution 
B)  of subrogation 
C)  to compensation 
D)  to reimbursement

Question 10

The basic rules of strict liability apply in determining the existence and nature of the relationship of principal and surety.

Accepted Answer

A) True 
 B)False

Exam 42: Introduction to Security

Which of the following statements best defines a surety?

The rights and liabilities of the surety and the guarantor are substantially different.

Each state has a statute that permits persons who contract to furnish labor or materials to improve real estate to claim a lien on the property until they are paid.

In a deed of trust transaction, when a trustee sells the property and the proceeds generate a surplus, it _____.

The provider of materials or labor is not entitled to a lien if the:

In a deed of trust transaction, when a trustee sells the property and the proceeds generate a deficiency, the _____.

If mortgagors sell the interest in their property without the consent of the mortgagee, _____.

Which of the following statements is true of accommodation sureties?

If the surety has to perform the principal's obligation, then the surety acquires all the rights that the creditor had against the principal. This is known as the surety's right _____.

The basic rules of strict liability apply in determining the existence and nature of the relationship of principal and surety.

Law, Legal Reasoning, and the Legal Profession

Dispute Settlement

Business Ethics and Corporate Social Responsibility

Business and the Constitution

Crimes

Intentional Torts

Negligence and Strict Liability

Licensing and Intellectual Property

The Nature and Origins of Contracts

Creating a Contract: Offers

Creating a Contract: Acceptances

Consideration

Capacity to Contract

Voluntary Consent

Illegality

The Form and Meaning of Contracts

Third Parties Contract Rights

Performance and Remedies

Formation and Terms of Sales Contracts

Warranties and Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

The Agency Relationship-Creation, Duties, and Termination

Liability of Principals and Agents to Third Parties

Employment Laws

Which Form of Business Organization

Partnerships

Formation and Termination of Corporations

Management of the Corporate Business

Financing the Corporation and the Role of the Shareholders

Securities Regulation

Legal Liability of Accountants

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Fund Transfers

Security Interests in Personal Property

Bankruptcy

The Antitrust Laws

Consumer Protection Laws

Environmental Regulation

Filters