Question 1

A debtor need not sign the financing statement.

Accepted Answer

A) True 
 B)False

Question 2

"Attachment" occurs when a secured party gives value, the debtor has acquired rights in the collateral, and:

Accepted Answer

A)   the debtor has completed his obligation to pay.
B)   the collateral is delivered to the borrower.
C)   the debtor and secured party have an agreement.
D)   All of these.

Question 3

Hank's tractor is collateral for a loan and Hank moves to the next county. In most states, the security instrument must be re-filed in the proper county or it will render the security interest ineffective.

Accepted Answer

A) True 
 B)False

Question 4

Two or more sureties bound for the same debt of a principal debtor are known as:

Accepted Answer

A)   absolute sureties.
B)   cosureties.
C)   conditional guarantors of collection.
D)   co-creditors.

Question 5

Under Article 9 of the UCC, a pledge is:

Accepted Answer

A)   the delivery of personal property to a creditor as security for the payment of a debt.
B)   a requirement that the secured party and the debtor agree to certain collateral.
C)   an equipment transfer before a forced sale.
D)   a form of indispensable paper.

Question 6

Article 9 of the UCC applies to a security interest without consent that arises by operation of law, such as a mechanic's lien.

Accepted Answer

A) True 
 B)False

Question 7

The Code's classifications of collateral according to nature are: (a) goods; (b) tangibles; and (c) dispensable paper.

Accepted Answer

A) True 
 B)False

Question 8

Automatic perfection means that:

Accepted Answer

A)   no financing statement need be filed.
B)   no agreement need be made between the debtor and the secured party.
C)   no value need be advanced.
D)   All of these.

Question 9

Bill owns and operates a farm and a farm machinery dealership. Under the Code, a new tractor that Bill uses on his farm is classified as:

Accepted Answer

A)   farm products.
B)   inventory.
C)   consumer goods.
D)   equipment.

Question 10

Possession is available as a means of perfecting a security interest in accounts and letter-of-credit rights.

Accepted Answer

A) True 
 B)False

Question 11

If Sharpe Finance Co. has a secured interest in Jeff's car and Jeff is in default, in most states, Sharpe may take the car from in front of Jeff's house without getting a court order.

Accepted Answer

A) True 
 B)False

Question 12

Dr. Wells purchased a refrigerator for use in storing medications at his office. The refrigerator will be classified as:

Accepted Answer

A)   consumer goods.
B)   equipment.
C)   a fixture.
D)   inventory.

Question 13

Mary financed her 72" high-definition TV with a bank, but is now delinquent on her payments. The bank holds a security interest in the TV. In most states, when Mary is not at home and without her knowledge, bank personnel may enter Mary's home to repossess the TV.

Accepted Answer

A) True 
 B)False

Question 14

A security interest is ineffective against the debtor until it "attaches."

Accepted Answer

A) True 
 B)False

Question 15

In states which have adopted certificate of title statutes for automobiles, trailers, mobile homes, and boats, perfection of a security interest must include both filing of a financing statement and notation on the certificate of title.

Accepted Answer

A) True 
 B)False

Question 16

With the exception of pledges, a security agreement must:

Accepted Answer

A)   be in an authenticated record.
B)   be signed by the debtor with his personal, not business, name.
C)   contain at least a generic description of the collateral, such as "all my personal property."
D)   All of these.

Question 17

The principal debtor's lack of capacity due to his status as a minor may be used by the surety to avoid payment of the obligation.

Accepted Answer

A) True 
 B)False

Question 18

Under the Code, collateral is classified according to:

Accepted Answer

A)   its nature and use.
B)   the fundamental rights of the secured party.
C)   the fundamental rights of the debtor.
D)   None of these.

Question 19

A security interest:

Accepted Answer

A)   is an interest only in personal property to secure payment or performance of an obligation.
B)   is effective against third parties, but not the debtor, when it "attaches."
C)   may arise in fixtures under UCC Article 9.
D)   in fixtures, even if perfected, will not have priority over a mortgage in the real property to which the goods are attached.

Question 20

Every consensual secured transaction involves:

Accepted Answer

A)   a debtor and  a secured party.
B)   collateral.
C)   a security agreement and a security interest.
D)   All of these.

Exam 37: Secured Transactions and Suretyship

Possession is available as a means of perfecting a security interest in accounts and letter-of-credit rights.

Correct AnswerverifiedShow Answer

A debtor need not sign the financing statement.

Correct AnswerverifiedShow Answer

Under Article 9 of the UCC, a pledge is:

Correct AnswerverifiedShow Answer

In states which have adopted certificate of title statutes for automobiles, trailers, mobile homes, and boats, perfection of a security interest must include both filing of a financing statement and notation on the certificate of title.

Correct AnswerverifiedShow Answer

"Attachment" occurs when a secured party gives value, the debtor has acquired rights in the collateral, and:

Correct AnswerverifiedShow Answer

The principal debtor's lack of capacity due to his status as a minor may be used by the surety to avoid payment of the obligation.

Correct AnswerverifiedShow Answer

Mary financed her 72" high-definition TV with a bank, but is now delinquent on her payments. The bank holds a security interest in the TV. In most states, when Mary is not at home and without her knowledge, bank personnel may enter Mary's home to repossess the TV.

Correct AnswerverifiedShow Answer

Dr. Wells purchased a refrigerator for use in storing medications at his office. The refrigerator will be classified as:

Correct AnswerverifiedShow Answer

A security interest:

Correct AnswerverifiedShow Answer

Bill owns and operates a farm and a farm machinery dealership. Under the Code, a new tractor that Bill uses on his farm is classified as:

Correct AnswerverifiedShow Answer

Hank's tractor is collateral for a loan and Hank moves to the next county. In most states, the security instrument must be re-filed in the proper county or it will render the security interest ineffective.

Correct AnswerverifiedShow Answer

With the exception of pledges, a security agreement must:

Correct AnswerverifiedShow Answer

Article 9 of the UCC applies to a security interest without consent that arises by operation of law, such as a mechanic's lien.

Correct AnswerverifiedShow Answer

Every consensual secured transaction involves:

Correct AnswerverifiedShow Answer

Two or more sureties bound for the same debt of a principal debtor are known as:

Correct AnswerverifiedShow Answer

If Sharpe Finance Co. has a secured interest in Jeff's car and Jeff is in default, in most states, Sharpe may take the car from in front of Jeff's house without getting a court order.

Correct AnswerverifiedShow Answer

The Code's classifications of collateral according to nature are: (a) goods; (b) tangibles; and (c) dispensable paper.

Correct AnswerverifiedShow Answer

A security interest is ineffective against the debtor until it "attaches."

Correct AnswerverifiedShow Answer

Automatic perfection means that:

Correct AnswerverifiedShow Answer

Under the Code, collateral is classified according to:

Correct AnswerverifiedShow Answer

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