Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Everyday Loans, Inc., issues a line of credit in Glade Electronics Corporation under a security agreement. Later, Glade buys new HD-TVs to add to its inventory. Everyday has a security interest in the new inventory

Accepted Answer

A)  if the security agreement included an after-acquired property clause. 
B)  if Everyday has not yet filed a financing statement. 
C)  if Glade bought the inventory with Everyday funds. 
D)  under no circumstances.

Question 3

Olaf is the creditor in a transaction with Phil. Once certain require?ments 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 4

Sara needs $1,500 to buy textbooks and other school supplies. Tomas agrees to loan Sara $1,500, accepting as collateral Sara'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 $1,500 to buy textbooks and...

Question 5

The method of perfecting a security interest does not depend on the classification of the collateral.

Accepted Answer

A) True 
 B)False

Question 6

Angie borrows $20,000 from First Line Credit using a field of timber trees as collateral. To perfect its security interest, First Line Credit must file its financing statement with

Accepted Answer

A)  the county clerk. 
B)  the mayor. 
C)  the city counsel. 
D)  the secretary of state.

Question 7

Sally is the secured party in a transaction with Lilly, who is the debtor. Sally files a financing statement with the appropriate state official. The financing statement must contain

Accepted Answer

A)  Lilly's signature. 
B)  Sally's bank account information. 
C)  Lilly's credit report. 
D)  a photograph of the collateral.

Question 8

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 9

Saf-T Lenders, Inc., takes possession of Tiara's stock in Urgent Care Corporation to perfect Saf-T's security interest in the stock. This is

Accepted Answer

A)  after-acquired property. 
B)  a pledge. 
C)  a purchase-money security interest. 
D)  a violation of most state laws.

Question 10

The concept of a floating lien applies to a constantly changing inventory.

Accepted Answer

A) True 
 B)False

Question 11

A floating lien cannot apply to the proceeds of a sale of after-acquired property.

Accepted Answer

A) True 
 B)False

Question 12

The payment of Paul's debt to Ryan is guaranteed by Paul's 2002 Honda Civic. Ryan filed the financing statement on July 1, 2012. If Ryan does nothing else, the financing statement will be effective until

Accepted Answer

A)  July 1, 2013. 
B)  July 1, 2014. 
C)  July 1, 2017. 
D)  July 1, 2022.

Question 13

A financing statement is effective for five years from the date of filing.

Accepted Answer

A) True 
 B)False

Question 14

Proceeds consist of whatever is received when collateral is sold.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

A secured party can release any col?lateral described in the financing statement, thereby terminating its security interest in that collateral.

Accepted Answer

A) True 
 B)False

Question 17

A financing statement must include a description of the collateral by type or item.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Clear Lake Credit Corporation lends funds to Donny, a consumer, to apply to the cost of a boat, which is the collateral for the loan. An enforceable security interest requires

Accepted Answer

A)  a written agreement and Clear Lake's possession of the boat. 
B)  a written agreement or Clear Lake's possession of the boat. 
C)  the boat seller's acknowledgement of the loan in writing. 
D)  Donny's possession of the boat.

Question 20

A continuation statement is effective only if it is filed within six months before the expiration of a financing statement.

Accepted Answer

A) True 
 B)False

Exam 23: Security Interests in Personal Property

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

Everyday Loans, Inc., issues a line of credit in Glade Electronics Corporation under a security agreement. Later, Glade buys new HD-TVs to add to its inventory. Everyday has a security interest in the new inventory

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

The method of perfecting a security interest does not depend on the classification of the collateral.

Angie borrows $20,000 from First Line Credit using a field of timber trees as collateral. To perfect its security interest, First Line Credit must file its financing statement with

Sally is the secured party in a transaction with Lilly, who is the debtor. Sally files a financing statement with the appropriate state official. The financing statement must contain

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

Saf-T Lenders, Inc., takes possession of Tiara's stock in Urgent Care Corporation to perfect Saf-T's security interest in the stock. This is

The concept of a floating lien applies to a constantly changing inventory.

A floating lien cannot apply to the proceeds of a sale of after-acquired property.

The payment of Paul's debt to Ryan is guaranteed by Paul's 2002 Honda Civic. Ryan filed the financing statement on July 1, 2012. If Ryan does nothing else, the financing statement will be effective until

A financing statement is effective for five years from the date of filing.

Proceeds consist of whatever is received when collateral is sold.

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

A secured party can release any col?lateral described in the financing statement, thereby terminating its security interest in that collateral.

A financing statement must include a description of the collateral by type or item.

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

Clear Lake Credit Corporation lends funds to Donny, a consumer, to apply to the cost of a boat, which is the collateral for the loan. An enforceable security interest requires

A continuation statement is effective only if it is filed within six months before the expiration of a financing statement.