Question 1

To create an enforceable security interest,the secured party must give value.

Accepted Answer

A) True 
 B)False

Question 2

A financing statement is effective for no more than five months from the date of filing.

Accepted Answer

A) True 
 B)False

Question 3

County Bank wants to perfect its security interest in collateral owned by Direct Sales Company.Most likely,a financing statement should be filed with

Accepted Answer

A) the local chamber of commerce. 
B) the county clerk. 
C) the federal loan officer. 
D) the secretary of state's office.

Question 4

If collateral consists of consumer goods subject to a purchase-money security interest,the secured party must "purchase" the goods on default.

Accepted Answer

A) True 
 B)False

Question 5

Everyday Loans,Inc. ,takes possession of Ferbie's stock in Glade Electronics Corporation to perfect Everyday's security interest in the stock.This is

Accepted Answer

A) after-acquired property. 
B) a pledge. 
C) a purchase-money security interest. 
D) proceeds.

Question 6

When a secured debt is paid,the secured party must file a termination statement regardless of the goods' classification.

Accepted Answer

A) True 
 B)False

Question 7

Fact Pattern 18-2
General Leasing Company (GLC) buys equipment for use as inventory, borrow¬ing $1 million from Helpful Finance Corporation for a security in¬terest in the equipment. The next day, GLC borrows $513,000 from Interstate Bank, also for a security interest in the equipment. GLC defaults on the loans.
-Refer to Fact Pattern 18-2.Suppose that two weeks after GLC takes possession of the equipment,Helpful and Interstate file financing statements,with Interstate filing first.In that circumstance,the party with priority to the equipment is

Accepted Answer

A) GLC. 
B) Helpful and Interstate proportionately. 
C) Helpful only. 
D) Interstate only.

Question 8

Sara needs $1,513 to buy textbooks and other school supplies.Tomas agrees to loan Sara $1,513,accepting as collateral Tomas's car.They put their agreement in writing and sign it.Sara keeps possession of the car.Does Tomas have an enforceable security interest? How can Tomas let other creditors know of his interest in the car?

Accepted Answer

The answer of Sara needs $1,513 to buy textbooks and...

Question 9

Under certain conditions,a purchase-money security interest will take priority over a previous creditor's interest in after-acquired property.

Accepted Answer

A) True 
 B)False

Question 10

Region Bank wants to perfect its security interest in timber owned by Superior Lumber,Inc.Most likely,a financing statement should be filed with

Accepted Answer

A) the local chamber of commerce. 
B) the county clerk. 
C) the federal loan officer. 
D) the secretary of state's office.

Question 11

A security interest is not enforceable after the creditor's rights have attached to the collateral.

Accepted Answer

A) True 
 B)False

Question 12

A purchase-money security interest arises only when a seller provides a buyer with the "purchase money" to buy goods.

Accepted Answer

A) True 
 B)False

Question 13

Quotient Financial Corporation is a secured party with a security interest in property owned by Retail Sales Company.Perfection of this security interest may not protect Quotient Financial against the claim of

Accepted Answer

A) a bank. 
B) a buyer in the ordinary course of business. 
C) a subsequent lien creditor. 
D) a trustee in bankruptcy.

Question 14

To qualify as a commercially reasonable sale,a secured party's sale of collateral,after default and repossession,must be public.

Accepted Answer

A) True 
 B)False

Question 15

The payment of Eden's debt to Flem is guaranteed by Eden's personal property.This property is

Accepted Answer

A) a secured party. 
B) a secured transaction. 
C) a security interest. 
D) collateral.

Question 16

The concept of a floating lien does not apply to a shifting stock of goods.

Accepted Answer

A) True 
 B)False

Question 17

Lena borrows from Mac and Nicol,using the same collateral for both loans.Only Nicol has a perfected security interest.Lena defaults on both loans.The party with first rights to the collateral is

Accepted Answer

A) Lena. 
B) Mac and Nicol,in proportion to Lena's debt to each. 
C) Mac only. 
D) Nicol only.

Question 18

Middling Credit Corporation asks Little Supply Company to agree to a security agreement that provides for coverage of the proceeds from the sale of after-acquired property.This is

Accepted Answer

A) a first-in,first-out rule. 
B) a floating lien. 
C) a funds guaranty. 
D) in violation of secured transactions law.

Question 19

The price that a secured party obtains on a sale of collateral is all that the creditor can recover on the debt.

Accepted Answer

A) True 
 B)False

Question 20

The payment of Jose's debt to Klint is guaranteed by Jose's personal property.The process by which Klint can protect himself against the claims of third parties to this property is

Accepted Answer

A) attachment. 
B) communication. 
C) perfection. 
D) search and seizure.

Exam 18: Security Interests in Personal Property

To create an enforceable security interest,the secured party must give value.

A financing statement is effective for no more than five months from the date of filing.

County Bank wants to perfect its security interest in collateral owned by Direct Sales Company.Most likely,a financing statement should be filed with

If collateral consists of consumer goods subject to a purchase-money security interest,the secured party must "purchase" the goods on default.

Everyday Loans,Inc. ,takes possession of Ferbie's stock in Glade Electronics Corporation to perfect Everyday's security interest in the stock.This is

When a secured debt is paid,the secured party must file a termination statement regardless of the goods' classification.

Under certain conditions,a purchase-money security interest will take priority over a previous creditor's interest in after-acquired property.

Region Bank wants to perfect its security interest in timber owned by Superior Lumber,Inc.Most likely,a financing statement should be filed with

A security interest is not enforceable after the creditor's rights have attached to the collateral.

A purchase-money security interest arises only when a seller provides a buyer with the "purchase money" to buy goods.

Quotient Financial Corporation is a secured party with a security interest in property owned by Retail Sales Company.Perfection of this security interest may not protect Quotient Financial against the claim of

To qualify as a commercially reasonable sale,a secured party's sale of collateral,after default and repossession,must be public.

The payment of Eden's debt to Flem is guaranteed by Eden's personal property.This property is

The concept of a floating lien does not apply to a shifting stock of goods.

Lena borrows from Mac and Nicol,using the same collateral for both loans.Only Nicol has a perfected security interest.Lena defaults on both loans.The party with first rights to the collateral is

Middling Credit Corporation asks Little Supply Company to agree to a security agreement that provides for coverage of the proceeds from the sale of after-acquired property.This is

The price that a secured party obtains on a sale of collateral is all that the creditor can recover on the debt.

The payment of Jose's debt to Klint is guaranteed by Jose's personal property.The process by which Klint can protect himself against the claims of third parties to this property is