Question 1

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 2

Summit Credit Corporation lends funds to Toby,a consumer,to apply to the cost of a sport utility vehicle (SUV),which is the collateral for the loan.An enforceable security interest also requires

Accepted Answer

A)  a written agreement and Summit's possession of the SUV. 
B)  a written agreement or Summit's possession of the SUV. 
C)  the vehicle seller's acknowledgement of the loan in writing. 
D)  Toby's possession of the SUV.

Question 3

A security agreement must be filed in person to be valid and enforceable.

Accepted Answer

A) True 
 B)False

Question 4

For a creditor to have an enforceable security interest,the debtor must have title to the collateral.

Accepted Answer

A) True 
 B)False

Question 5

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 6

Computer World (CW),after repossessing a multimedia system from Dave,a consumer,decides to keep the system instead of reselling it.CW sends written notice to Dave.CW can now keep the system

Accepted Answer

A)  only after attempting an unsuccessful public sale of the system. 
B)  only after notifying any other appropriate secured party. 
C)  unless Dave objects. 
D)  under any circumstances.

Question 7

The payment of Nero's debt to Olly is guaranteed by Nero's personal property.Nero is located in Pennsylvania.Olly communicates to the appropriate state official a security agreement that uses only Quality Engineering,the trade name of Nero's business.To perfect Olly's interest,this is

Accepted Answer

A)  irrelevant. 
B)  not sufficient. 
C)  sufficient if Quality Engineering is a sole proprietorship. 
D)  sufficient if the trade name is spelled correctly or misspelled slightly.

Question 8

The payment of Brian's debt to Chuck is guaranteed by Brian's personal property.This is

Accepted Answer

A)  a reorganization. 
B)  a secured transaction. 
C)  a suretyship agreement. 
D)  a violation of most state laws.

Question 9

Olaf is the creditor in a transaction with Phil.Once certain requirements are met,Olaf's rights will attach,which means that Olaf will have

Accepted Answer

A)  an indivisible ownership right to Phil's property. 
B)  an enforceable security interest in Phil's property. 
C)  a notice affixed to Phil's property. 
D)  the permission of a court to seize Phil's property.

Question 10

Efrem owns Fans & Players,a retail sporting goods shop.When Great Hill Lodge,a new ski resort,is built in the area,Efrem decides to expand and borrows a large sum from Hometown Bank.The bank takes a security interest in Efrem's present inventory and any after-acquired inventory as collateral for the loan.The bank properly perfects the security interest by filing a financing statement.Efrem's business is profitable,and he begins doubling his inventory. A year later,an avalanche destroys the ski slope and lodge.Efrem's business takes a turn for the worse,and he defaults on his debt to the bank.The bank seeks possession of his entire inventory,even though the inventory is twice as large as it was when the loan was made.Efrem claims that the bank has rights to only half of his inventory.Is Efrem correct? Explain.

Accepted Answer

The answer of Efrem owns Fans & Players,a retail sporting...

Question 11

Mona lives in New Jersey,but she works in New York.Mona borrows $1,000 from National Bank,using her motorcycle as collateral.To perfect its security interest,the bank must file its financing statement in at least

Accepted Answer

A)  every state. 
B)  New Jersey. 
C)  New Jersey and New York. 
D)  New York.

Question 12

Select Furniture Store sells household consumer goods.To create a purchase-money security interest,Select Furniture must

Accepted Answer

A)  assign, to a collecting agent, a portion of its accounts payable. 
B)  assign, to a collecting agent, a portion of its accounts receivable. 
C)  extend credit for part or all of the purchase price of the goods. 
D)  refer purchasers to a third-party lender.

Exam 20: Security Interests in Personal Property