Question 1

Fact Pattern 20-1 (Questions 14-16 apply)
Excel Vehicles, Inc., makes and sells automobiles to auto dealers, including Fine Auto Sales. Fine sells the cars to consumers and businesses.
-Refer to Fact Pattern 20-1.Ira,a police officer,buys an Excel from Fine to drive in his off-duty hours.Ira's Excel is

Accepted Answer

A)  a consumer good. 
B)  an accession. 
C)  equipment. 
D)  inventory.

Question 2

A secured party can release the collateral described in a filed financing statement only if the debtor has paid the debt.

Accepted Answer

A) True 
 B)False

Question 3

A future advance against a line of credit must be of the same type as the original advance to be subject to the same collateral.

Accepted Answer

A) True 
 B)False

Question 4

A security interest cannot be perfected without the filing of a financing statement.

Accepted Answer

A) True 
 B)False

Question 5

Elias repays his debt,incurred to buy consumer goods,to Fidelity Bank and immediately files a written request for a termination statement.Fidelity

Accepted Answer

A)  must comply within one month of receipt of the letter. 
B)  must comply within twenty days of receipt of the letter. 
C)  must refund $500 to Elias. 
D)  need not comply.

Question 6

Fact Pattern 20-1 (Questions 14-16 apply)
Excel Vehicles, Inc., makes and sells automobiles to auto dealers, including Fine Auto Sales. Fine sells the cars to consumers and businesses.
-Refer to Fact Pattern 20-1.Holly,a professional driver,buys an Excel from Fine to drive in a Grand Prix race.Holly's Excel is

Accepted Answer

A)  a consumer good. 
B)  an accession. 
C)  equipment. 
D)  inventory.

Question 7

Dag is the secured party in a secured transaction with Elmo.In this transaction,Dag

Accepted Answer

A)  has a security interest. 
B)  owes payment. 
C)  owes performance. 
D)  owns collateral.

Question 8

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 9

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 10

Prime Property Investments,Inc.,files a financing statement to provide notice of its security interest in the property of Qwik Breakfast Restaurant.The initial effective term of a financing statement is a period of

Accepted Answer

A)  five days. 
B)  five months. 
C)  five weeks. 
D)  five years.

Question 11

Hal's Hardware store defaults on a debt to Intrastate Bank,which takes possession of the collateral securing the debt.Intrastate sells the collateral.The proceeds from the sale are applied first to

Accepted Answer

A)  Hal's debt to Intrastate. 
B)  Hal's debts to other creditors. 
C)  Intrastate's fees for the sale. 
D)  payments Hal's made on the debt to Intrastate.

Question 12

Proceeds consist of whatever is received when collateral is sold.

Accepted Answer

A) True 
 B)False

Question 13

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 14

The payment of Yves's debt to Zac is guaranteed by Yves's personal property.Their agreement describes Yves's subject property by serial number.To establish Zac's interest,this is

Accepted Answer

A)  irrelevant. 
B)  not sufficient. 
C)  sufficient if it accurately describes the parties' agreement. 
D)  sufficient unless it is too tedious to review.

Question 15

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 16

A security interest may attach to intangible collateral but cannot be perfected.

Accepted Answer

A) True 
 B)False

Question 17

To be valid,a security agreement must contain a description of the collateral.

Accepted Answer

A) True 
 B)False

Question 18

The payment of John's debt to Kirsten is guaranteed by John's personal property.Kirsten is most likely to perfect her interest by

Accepted Answer

A)  attaching a bright label to John's property. 
B)  calculating the precise amount of John's debt. 
C)  correcting grammatical errors in the parties' written agreement. 
D)  filing a financing statement with the appropriate authority.

Question 19

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 20

The payment of Frida's debt to Gianini is guaranteed by Frida's personal property.Gianini is

Accepted Answer

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

Exam 20: Security Interests in Personal Property

A secured party can release the collateral described in a filed financing statement only if the debtor has paid the debt.

A future advance against a line of credit must be of the same type as the original advance to be subject to the same collateral.

A security interest cannot be perfected without the filing of a financing statement.

Elias repays his debt,incurred to buy consumer goods,to Fidelity Bank and immediately files a written request for a termination statement.Fidelity

Dag is the secured party in a secured transaction with Elmo.In this transaction,Dag

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

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

Prime Property Investments,Inc.,files a financing statement to provide notice of its security interest in the property of Qwik Breakfast Restaurant.The initial effective term of a financing statement is a period of

Hal's Hardware store defaults on a debt to Intrastate Bank,which takes possession of the collateral securing the debt.Intrastate sells the collateral.The proceeds from the sale are applied first to

Proceeds consist of whatever is received when collateral is sold.

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

The payment of Yves's debt to Zac is guaranteed by Yves's personal property.Their agreement describes Yves's subject property by serial number.To establish Zac's interest,this is

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

A security interest may attach to intangible collateral but cannot be perfected.

To be valid,a security agreement must contain a description of the collateral.

The payment of John's debt to Kirsten is guaranteed by John's personal property.Kirsten is most likely to perfect her interest by

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

The payment of Frida's debt to Gianini is guaranteed by Frida's personal property.Gianini is