Question 1

Alice hired Robert as an associate accountant in Alice's accounting firm. To protect herself against the possibility that Robert might be dishonest, Alice obtained a ¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬__________ bond.

Accepted Answer

A)  bail 
B)  judicial 
C)  performance 
D)  fidelity 
E)  official

Question 2

Which of the following is true of the rule of priorities regarding the disposal of a debtor's property when the debtor defaults?

Accepted Answer

A)  Persons who become lien creditors before or after the security interest is perfected win. 
B)  If the security interest was perfected at the time of filing for bankruptcy, the bankruptcy trustee can take the collateral. 
C)  The Bankruptcy Act provides that a bankruptcy trustee can avoid a transfer of an interest of the debtor in property to or for the benefit of a creditor. 
D)  A perfected purchase-money security interest in goods other than inventory or livestock has priority over a conflicting security interest in the same goods. 
E)  A mortgage has priority over a perfected security in fixtures, even if the security interest is a purchase-money security interest.

Question 3

In strict foreclosure, a secured creditor can accept the collateral in full satisfaction or partial satisfaction of the debt.

Accepted Answer

A) True 
 B)False

Question 4

A security interest in consumer goods may be perfected without filing a financing statement.

Accepted Answer

A) True 
 B)False

Question 5

Butch bought a bulldozer for his construction business from Construction Supply (CS), which properly perfected its security interest in the machine. The bulldozer required repairs; Butch took it to Mike Mechanic who performed $1100 worth of repair work on it. Butch then failed to pay either CS or Mechanic, and CS appeared at Mechanic's shop to repossess the machine. As between Mechanic and CS, who gets paid first?

Accepted Answer

A)  CS because it perfected its security interest. 
B)  CS because the bulldozer is not "consumer goods." 
C)  CS because it has a purchase-money security interest in the bulldozer. 
D)  Mechanic because he has a mechanic's lien which takes priority over the CS's security interest. 
E)  It is not possible to determine who wins on the facts here.

Question 6

A written security agreement is not needed when the debtor pledges collateral to the creditor.

Accepted Answer

A) True 
 B)False

Question 7

If two creditors have a security interest in the same goods, the most recent perfection prevails.

Accepted Answer

A) True 
 B)False

Question 8

Accessions are goods that are physically united with other goods in such a manner that the identity of the original good is lost.

Accepted Answer

A) True 
 B)False

Question 9

A lien is security obtained through operation of law.

Accepted Answer

A) True 
 B)False

Question 10

A creditor who first files a financing statement will usually not have to attach its interest in collateral.

Accepted Answer

A) True 
 B)False

Question 11

A lien that is expanded to cover any additional property that is acquired by the debtor while the debt is outstanding is known as a:

Accepted Answer

A)  tax lien. 
B)  possessory lien. 
C)  floating lien. 
D)  blanket lien. 
E)  judgment lien.

Question 12

A buyer of consumer goods, for value, who has no knowledge of any security interest, takes

Accepted Answer

A)  subject to any purchase-money security interest perfected automatically. 
B)  subject to any security interest in the goods. 
C)  free of any pmsi perfected automatically. 
D)  free of any security interest perfected by filing a financing statement. 
E)  free of any security interest perfected by a pledge of the collateral.

Question 13

The financing statement is effective for ten years from the date of filing.

Accepted Answer

A) True 
 B)False

Exam 28: Secured Transactions and Suretyship

Alice hired Robert as an associate accountant in Alice's accounting firm. To protect herself against the possibility that Robert might be dishonest, Alice obtained a ¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬__________ bond.

Which of the following is true of the rule of priorities regarding the disposal of a debtor's property when the debtor defaults?

In strict foreclosure, a secured creditor can accept the collateral in full satisfaction or partial satisfaction of the debt.

A security interest in consumer goods may be perfected without filing a financing statement.

A written security agreement is not needed when the debtor pledges collateral to the creditor.

If two creditors have a security interest in the same goods, the most recent perfection prevails.

Accessions are goods that are physically united with other goods in such a manner that the identity of the original good is lost.

A lien is security obtained through operation of law.

A creditor who first files a financing statement will usually not have to attach its interest in collateral.

A lien that is expanded to cover any additional property that is acquired by the debtor while the debt is outstanding is known as a:

A buyer of consumer goods, for value, who has no knowledge of any security interest, takes

The financing statement is effective for ten years from the date of filing.