Question 1

Don borrows $90,000 to buy a home.His mortgage is with Western Bank.Don is unable to make his mortgage payments.Western forecloses on Don's house and sells it in a judicial sale.The bank gets $95,000 for the house.In this case,it:

Accepted Answer

A)  keeps the extra money as the new owner of the property
B)  keeps the extra money to reimburse it for its expenses
C)  must pay the secretary of state for the expenses the office has incurred
D)  obtain a mechanic's lien against Don
E)  none of the other choices

Question 2

The most commonly used form of draft is a:

Accepted Answer

A)  check
B)  note
C)  certificate of deposit
D)  deposit slip
E)  promissory note

Question 3

If an instrument is made __________,the party in possession is required only to deliver the instrument to transfer it.

Accepted Answer

A)  "to transferee"
B)  "to holder"
C)  "to possessor"
D)  "to recipient"
E)  none of the other choices are correct

Question 4

A possessory lien applies to personal property.

Accepted Answer

A) True 
 B)False

Question 5

If a negotiable instrument is transferred by negotiation,the transferee takes the instrument:

Accepted Answer

A)  with all of the transferor's rights and responsibilities
B)  free of the transferor's responsibilities
C)  with the duties that have been assigned to the instrument by the bearer
D)  with the rights that have been assigned to the instrument by the holder in due course
E)  none of the other choices

Question 6

A(n) _____________ is a note promising to repay borrowed money,probably with interest.

Accepted Answer

A)  negotiable instrument
B)  negotiable note
C)  promissory note
D)  lending note
E)  borrowing note

Question 7

In Matter of Kmart Corp.the appeals court held that Kmart could make payments to preferred vendors,rather than others with better claims,as part of a rational Chapter 11 strategy to remain in business.

Accepted Answer

A) True 
 B)False

Question 8

Capital refers to:

Accepted Answer

A)  a company's ability to extend credit to a customer
B)  the debtor's assets to secure debt
C)  the debtor's ability to pay
D)  the debtor's reputation
E)  none of the other choices are correct

Question 9

A note involves two parties,the maker and the payee.Payment must be on demand.

Accepted Answer

A) True 
 B)False

Question 10

To meet the UCC's requirements for negotiability,an instrument must be in writing.

Accepted Answer

A) True 
 B)False

Question 11

In In re Darby the appeals court held that a person bankrupt under Chapter 13 is
entitled to have cable television service so long as they make payments in advance.

Accepted Answer

A) True 
 B)False

Question 12

Each year,approximately how many individuals in the U.S.file for bankruptcy?

Accepted Answer

A)  ten thousand
B)  twenty thousand
C)  one hundred thousand
D)  five hundred thousand
E)  over one million

Question 13

The party who borrows money (gets credit)is called the creditor.

Accepted Answer

A) True 
 B)False

Question 14

To transfer an instrument made "to the order" of the payee,the payee must:

Accepted Answer

A)  endorse the instrument
B)  deliver the instrument to a third party
C)  destroy the original instrument
D)  both a and b are necessary
E)  none of the other choices are correct

Question 15

A bill of exchange is a draft that guarantees payment for goods in international trade.

Accepted Answer

A) True 
 B)False

Question 16

When real estate itself is used to secure a debt obligation it is evidenced by a(n) :

Accepted Answer

A)  certificate of real estate
B)  draft
C)  lien
D)  credit report
E)  none of the other choices are correct

Question 17

Debts of the bankrupt under Chapter 13:

Accepted Answer

A)  are all discharged
B)  are discharged,if they involve past taxes
C)  are discharged,if they involve alimony
D)  are discharged only in part
E)  none of the other choices

Question 18

When personal property is used as collateral to back up a loan,the note created is a:

Accepted Answer

A)  balloon note
B)  fixed note
C)  personal note
D)  property note
E)  none of the other choices are correct

Question 19

A general creditor usually collects on a debt owed by an insolvent debtor by taking collateral from the debtor to sell for debt payment.

Accepted Answer

A) True 
 B)False

Question 20

If a negotiable instrument is transferred by negotiation,the transferee takes the instrument:

Accepted Answer

A)  with all of the transferor's rights and responsibilities
B)  with all of transferor's responsibilities,but none of the rights
C)  with the duties that have been assigned to the instrument by the bearer
D)  with the rights that have been assigned to the instrument by the holder in due course
E)  none of the other choices

Exam 12: Negotiable Instruments, credit, and Bankruptcy

To transfer an instrument made "to the order" of the payee,the payee must:

Correct AnswerverifiedShow Answer

Don borrows $90,000 to buy a home.His mortgage is with Western Bank.Don is unable to make his mortgage payments.Western forecloses on Don's house and sells it in a judicial sale.The bank gets $95,000 for the house.In this case,it:

Correct AnswerverifiedShow Answer

The most commonly used form of draft is a:

Correct AnswerverifiedShow Answer

A possessory lien applies to personal property.

Correct AnswerverifiedShow Answer

If a negotiable instrument is transferred by negotiation,the transferee takes the instrument:

Correct AnswerverifiedShow Answer

When real estate itself is used to secure a debt obligation it is evidenced by a(n) :

Correct AnswerverifiedShow Answer

In Matter of Kmart Corp.the appeals court held that Kmart could make payments to preferred vendors,rather than others with better claims,as part of a rational Chapter 11 strategy to remain in business.

Correct AnswerverifiedShow Answer

In In re Darby the appeals court held that a person bankrupt under Chapter 13 is entitled to have cable television service so long as they make payments in advance.

Correct AnswerverifiedShow Answer

If an instrument is made __________,the party in possession is required only to deliver the instrument to transfer it.

Correct AnswerverifiedShow Answer

Debts of the bankrupt under Chapter 13:

Correct AnswerverifiedShow Answer

To meet the UCC's requirements for negotiability,an instrument must be in writing.

Correct AnswerverifiedShow Answer

Capital refers to:

Correct AnswerverifiedShow Answer

The party who borrows money (gets credit)is called the creditor.

Correct AnswerverifiedShow Answer

A general creditor usually collects on a debt owed by an insolvent debtor by taking collateral from the debtor to sell for debt payment.

Correct AnswerverifiedShow Answer

If a negotiable instrument is transferred by negotiation,the transferee takes the instrument:

Correct AnswerverifiedShow Answer

Each year,approximately how many individuals in the U.S.file for bankruptcy?

Correct AnswerverifiedShow Answer

A bill of exchange is a draft that guarantees payment for goods in international trade.

Correct AnswerverifiedShow Answer

A note involves two parties,the maker and the payee.Payment must be on demand.

Correct AnswerverifiedShow Answer

A(n) _____________ is a note promising to repay borrowed money,probably with interest.

Correct AnswerverifiedShow Answer

When personal property is used as collateral to back up a loan,the note created is a:

Correct AnswerverifiedShow Answer

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