Multiple-Choice Questions
1. Under the UCC Article 9, which of the following actions will best perfect a security interest in a negotiable instrument against any other party?
(a) Filing a security agreement
(b) Taking possession of the instrument
(c) Perfecting by attachment
(d) Obtaining a duly executed financing statement
2. Jim's birth certificate lists him as "James Brown Smith;" his driver's license identifies him as "Jim Smith;" but his business card reads "J.B. Smith" and his friends call him Jimbo. How should the financing statement list this debtor's name?
(a) James Smith
(b) J.B. Smith
(c) Jim Smith
(d) James Brown Smith
3. Mars, Inc., manufactures and sells VCRs on credit directly to wholesalers, retailers, and consumers. Mars can perfect its security interest in the VCRs it sells without having to file a financing statement or take possession of the VCRs if the sale is made to which of the following:
(a) Retailers
(b) Wholesalers that sell to distributors for resale
(c) Consumers
(d) Wholesalers that sell to buyers in ordinary course of business
4. Bank has loaned unsecured money to Retailer, which still owes $700,000. Bank becomes nervous that Retailer is on the verge of bankruptcy, and sends a "notice of security interest" to Retailer, claiming a security interest in all inventory and real estate of Retailer. Retailer does not respond. Bank files its notice in the state's central filing office. When Retailer goes bankrupt, Bank
(a) Has a perfected security interest in the inventory but not the real estate.
(b) Has a perfected security interest in the real estate but not the inventory.
(c) Has a perfected security interest in both the real estate and the inventory.
(d) Has no security interest in either the real estate or the inventory.
(e) Has an unperfected security interest in both the real estate and the inventory.
5. Millie lends Arthur, her next-door neighbor, $25,000. He gives her his diamond ring as collateral for the loan. Which statement is true?
(a) Millie has no valid security interest in the ring because the parties did not enter into a security agreement.
(b) Millie has no valid security interest in the ring because she has not filed appropriate papers.
(c) Millie has an attached, unperfected security interest in the ring.
(d) Millie has an attached, unperfected security interest in the ring but can perfect her interest by filing.
(e) Millie has an attached, perfected security interest in the ring.