Pierce Electrical Is a New Company

Multiple Choice

Pierce Electrical is a new company.Upon its creation, Pierce obtained a loan from the Bank of Montreal.Collateral consisted of a perfected general security agreement.That agreement was registered on April 30.On June 1, Pierce realized it needed to expand its fleet.In order to buy 15 new vans on credit, it created a purchase money security interest with the dealer and the vans were used as collateral.That interest was registered on June 8.Which of the following statements is most likely to be TRUE?

A) If Pierce defaults, the general security agreement must be settled first.
B) If Pierce defaults, the purchase money security interest must be settled first.
C) The purchase money security interest is not valid because it was not perfected within 5 days.
D) Because of the purchase money security interest, the bank cannot recover its entire interest in the event of default.
E) The purchase money security interest is not valid because purchase money security interests cannot be used for physical capital.