Deck 27: Secured Transactions and E-Filing

Question 1

A chattel paper is a record that evidences both a monetary obligation and a security interest in specific goods and software used in the goods.

Answer 1

True

Question 2

Accessions are pieces of individual property or goods that are not united with any other property.

Answer 2

False

Question 3

In a three-party secured transaction,the party that purchases the good or service is known as the buyer-secured creditor.

Answer 3

False

Question 4

Security interest is the rate of interest per annum which is entitled to the party that secures payment or performance of an obligation

Question 5

The property in which a security interest is taken is called collateral.

Question 6

A two-party secured transaction occurs when a seller sells goods to a buyer on credit and retains a security interest in the goods.

Question 7

The extension of credit in a secured credit requires the purchaser's pledge to some personal property as collateral for the loan.

Question 8

A three-party secured transaction occurs when a seller sells goods to a buyer who has obtained financing from a third-party lender who takes a security interest in the goods sold.

Question 9

If a lender extends unsecured credit to a debtor,the creditor takes no interest in any collateral to secure the loan.

Question 10

Chattel paper is considered as tangible personal property.

Question 11

Tangible personal property includes securities,patents,trademarks,and copyrights.

Question 12

Attachment is a situation in which the value of the creditor's collateral is insufficient to satisfy the debt it is collated for.

Question 13

In a secured credit,the creditor cannot recover the collateral despite the debtor's defaults on the loan.

Question 14

A floating lien is a security interest in property that was not in the possession of the debtor when the security agreement was executed.

Question 15

A secured transaction is one in which the creditor and debtor carry out financial transaction in a secure medium,such as a private communication channel.

Question 16

Intangible personal properties cannot be used as collateral to a security agreement.

Question 17

To be valid,a security agreement must set forth the creditor's rights upon the debtor's default.

Question 18

In a secured transaction,the debtor is the secured party.

Question 19

Article 9 of the Uniform Commercial Code governs secured transactions in personal property.

Question 20

After-acquired property is property obtained by the creditor after a security agreement has been executed.

Question 21

Which of the following is considered tangible personal property?

A)car
B)mutual fund investment
C)trademark
D)patent

Question 22

Retention of collateral refers to a debtor's repossession of the collateral after paying the debt.

Question 23

An artisan's lien is a statutory lien given to workers on personal property to which they furnish services or materials in the ordinary course of business.

Question 24

A termination statement is filed when the secured party wishes to claim the collateral because the debt has not been paid.

Question 25

The term sales proceeds refers to the resulting assets from the sale,exchange,or disposal of collateral subject to a security agreement.

Question 26

A financing statement refers to a document filed by a secured creditor with the appropriate government office that constructively notifies the world of his or her security interest in personal property.

Question 27

For an artisan's lien to be effective,the artisan must be in possession of the property.

Question 28

Perfection of a security interest establishes the right of a secured creditor against other creditors who claim an interest in the collateral.

Question 29

A creditor who has the only secured interest in the debtor's collateral has priority over unsecured interests.

Question 30

Only one continuation statement can be filed for a financing statement.

Question 31

A financing statement covering fixtures is called a continuation statement.

Question 32

Perfection by investment of collateral is one of the methods of perfecting a security interest under the UCC.

Question 33

Repossession refers to a right granted to a secured creditor to take possession of the collateral upon default by the debtor.

Question 34

________ is a situation in which a creditor agrees to extend credit only if the purchaser pledges some personal property as collateral for the loan.

A)Floating lien
B)Attachment
C)Mortgage
D)Secured credit

Question 35

Purchase money security interest is an interest a creditor automatically obtains when he or she extends credit to a consumer to purchase consumer goods.

Question 36

A property in which a security interest is taken is called ________.

A)collateral
B)escrow
C)attachment
D)leverage

Question 37

Inability of a debtor to pay a debt owing to bankruptcy does not constitute default.

Question 38

Which article of the Uniform Commercial Code governs secured transactions in personal property?

A)Article 8
B)Article 9
C)Article 18
D)Article 19

Question 39

Financing statements are effective for five years from the date of filing.

Question 40

Attachments are funds advanced to a debtor from a line of credit secured by collateral.

Question 41

What of the following is true of the rule of perfection by possession of collateral?

A)A creditor cannot take possession of the collateral until a financing statement is filed.
B)No financing statement has to be filed if the creditor has physical possession of the collateral.
C)A debtor cannot acquire security against the collateral without filing a financing statement.
D)A financing statement can be filed only against intangible personal property placed as collateral.

Question 42

Which of the following is true of financing statements?

A)They cannot be electronically filed.
B)They are effective for one year from the date of filing.
C)Expired financing statements cannot be extended.
D)They are available for review by the public.

Question 43

A(n)________ is a situation in which a creditor has an enforceable security interest against a debtor and can satisfy the debt out of the designated collateral.

A)floating lien
B)secured transaction
C)attachment
D)redemption

Question 44

A(n)________ refers to a security interest in property that was not in the possession of the debtor when the security agreement was executed.

A)floating lien
B)after-acquired property
C)attachment
D)future advance

Question 45

A(n)________ is property that a debtor acquires post the execution of a security agreement.

A)floating lien
B)after-acquired property
C)attachment
D)future advance

Question 46

Which of the following refers to the resulting assets from the exchange or disposal of collateral subject to a security agreement?

A)sale proceeds
B)future advances
C)floating lien
D)after-acquired property

Question 47

Which of the following is considered intangible personal property?

A)vehicles
B)equipments
C)accessions
D)deposit accounts

Question 48

A business purchases an airplane from an airplane manufacturer.The business obtains a loan to purchase the airplane from a bank,which obtains a security interest in the airplane.The airplane manufacturer is paid for the airplane from of the proceeds of the loan.This is a ________ transaction.

A)two-party secured
B)three-party secured
C)perfected
D)attached

Question 49

Which of the following terms refers to goods that are physically united with other goods such that the identity of the original goods is not lost?

A)inventories
B)general intangibles
C)accessions
D)stocks

Question 50

A(n)________ has an ownership or other interest in the collateral and owes payment of a secured obligation.

A)creditor
B)debtor
C)seller
D)lender

Question 51

A ________ is a written document signed by a debtor that creates a security interest in personal property.

A)license
B)lease agreement
C)security agreement
D)chattel paper

Question 52

Which of the following transactions occurs when a seller sells goods to a buyer on credit and retains a security interest in the goods?

A)two-party secured
B)three-party secured
C)perfected
D)attached

Question 53

William buys a $500,000 house from Keith Geller through a realtor.He makes a down payment of $200,000.He borrows the rest from Smith and Sons,a lending firm,and places his new house as collateral for the loan.Which of the following is the debtor in this case?

A)William
B)Keith Geller
C)Smith and Sons
D)the realtor

Question 54

________ is a process that establishes the right of a secured creditor against other creditors who claim an interest in the collateral.

A)Disposition of collateral
B)Retention of collateral
C)Perfection of a security interest
D)Repossession of a security interest

Question 55

John buys a new car with the help of a loan.He permits the creditor to take possession of the car if he cannot repay the loan in time.Here,the car is the ________.

A)after-acquired property
B)collateral
C)intangible personal property
D)floating lien

Question 56

A(n)________ is a record that evidences both a monetary obligation and a security interest in specific goods and software used in the goods.

A)chattel paper
B)citation
C)financing statement
D)document of possession

Question 57

When a buyer obtains a loan from a bank to pay the seller,the transaction is known as a(n)________.

A)attachment
B)floating-lien
C)two-party secured transaction
D)three-party secured transaction

Question 58

Kimberly borrows $50,000 from a bank.She gives the bank a security interest in her ________ inventory.This implies that if Kimberly does not repay the loan in the stipulated period,the bank can claim any assets she purchased post the draft of the security agreement.

A)floating lien
B)future advance
C)attached
D)after-acquired

Question 59

When a creditor extends credit to a debtor and takes a security interest in some personal property of the debtor,it is called a ________.

A)super-priority lien
B)collateral claim
C)collateral disposition
D)secured transaction

Question 60

A(n)________ refers to a document filed by a secured creditor with the appropriate government office that constructively notifies the world of his or her security interest in personal property.

A)security disclosure
B)financing statement
C)possession statement
D)custodial statement

Question 61

A(n)________ is a statutory lien given to workers on personal property to which they furnish services or materials in the ordinary course of business.

A)super-priority lien
B)floating lien
C)artisan's lien
D)judgment lien

Question 62

Explain in brief the concept of deficiency judgment with an example.

Question 63

Gregory borrows $200,000 from Mountain Bank to purchase a plot of land,and Mountain Bank perfects its security interest in the house for this amount.Gregory defaults on the loan when he owes $80,000 to the bank.His house has gone down in value to $160,000 at the time of default,but he has other personal assets to satisfy the debt.Which of the following is a course of action for Mountain Bank to recover the debt?

A)proceed to judgment against Gregory
B)file a financing statement
C)release a termination statement
D)proceed to repossess the collateral

Question 64

Outline the priority of claims.

Question 65

Distinguish between two-party and three-party secured transactions with examples.

Question 66

________ permits a secured lender to recover other property or income from a defaulting debtor if the collateral is insufficient to repay the unpaid loan.

A)Redemption right
B)Deficiency judgment
C)Disposition of collateral
D)Retention of collateral

Question 67

What is a secured transaction?

Question 68

Which of the following is true of disposition of collateral?

A)Disposition of collateral must be a public proceeding.
B)The debtor is entitled to receive any surplus collateral that remains after disposition.
C)The debtor need not be notified of the disposition as the creditor has complete claim on the collateral.
D)Disposition of collateral occurs when the default is by the creditor.

Question 69

Marcia buys a $3,000 high-definition plasma television for her home on credit extended by the seller,Circuit City.Circuit City requires Marcia to sign a security agreement.Circuit City has a ________ interest in the television that is automatically perfected at the time of the credit sale.

A)cumulative security
B)future advance monetary
C)default
D)purchase money security

Question 70

Which of the following constitutes default?

A)repaying a debt before it is due
B)bankruptcy of the debtor
C)increase of rate of interest by the creditor midway through debt repayment
D)theft of the collateral

Question 71

Which of the following is true of priority of claims?

A)If two or more secured parties claim an interest in the same collateral but only one has perfected his or her security interest,the perfected security interest has priority.
B)Although one of the parties to claim an interest in the collateral has perfected his or her security interest,all the parties are given fair and equal priority.
C)If two or more secured parties claim an interest in the same collateral but neither has a perfected claim,they are given equal priority irrespective of attachments.
D)If two or more secured parties claim an interest in the same collateral but neither has a perfected claim,the first to claim has priority.

Question 72

The term ________ refers to a secured creditor's repossession of collateral upon a debtor's default and selling,leasing,or otherwise disposing of it in a commercially reasonable manner.

A)repossession
B)disposal of the goods
C)disposition of collateral
D)retention of collateral

Question 73

What is repossession?

A)a right granted to the debtor to take possession of the collateral after repayment of the debt
B)a right granted to the debtor to take possession of the collateral before repayment of the debt
C)a right granted to a secured creditor to take possession of the collateral upon default by the debtor
D)the act of possession of the collateral by the court owing to default by both debtor and creditor

Question 74

What is a financing statement? What is its significance in perfecting a security interest?

Question 75

Kelly borrows $12,000 from Terry Oswald to pay for her mother's surgery.The debt-repayment period is 15 months but Kelly manages to repay it in 11 months.Which of the following must be filed by Oswald after receiving the final installment of his money?

A)financing statement
B)statement of collateral claim
C)termination statement
D)continuation statement

Question 76

________ is an interest a creditor automatically obtains when he or she extends credit to a consumer to purchase consumer goods.

A)Purchase money security interest
B)Cumulative security interest
C)Future advance monetary interest
D)Default interest

Question 77

The term ________ refers to a secured creditor's possession of collateral upon a debtor's default and proposal to retain the collateral in satisfaction of the debtor's obligation.

A)repossession
B)disposal of the goods
C)disposition of collateral
D)retention of collateral

Question 78

________ is a situation in which the creditor does not have to file a financing statement or take possession of the goods to perfect his or her security interest.

A)Perfection by possession of collateral
B)Perfection by attachment
C)Perfection by claim
D)Perfection without statement

Question 79

Darrel,Smith,Keith and Aaron are claimants to a collateral interest.Smith and Darrel secure their interest.Aaron takes physical possession of the collateral.Keith files a financing statement some time later.Who among the four would have highest priority of claim to the collateral?

A)Darrel
B)Smith
C)Keith
D)Aaron

Question 80

A secured creditor must ________ the collateral if he or she receives a written objection to the proposal from a person entitled to receive notice within 20 days after the notice was sent.

A)dispose of
B)repossess
C)retain
D)claim