1. When a debtor defaults, a secured creditor cannot take peaceful possession of the collateral without going to court.

A) True

B) False

2. When a debtor defaults, a secured party who does not choose to retain the collateral must give it back to the debtor in exchange for cash.

A) True

B) False

3. An artisan's lien exists as long as the debtor maintains possession of the goods.

A) True

B) False

4. The first security interest to be perfected is the last in priority over other perfected security interests.

A) True

B) False

5. Every interest in personal property that guarantees the payment or performance of an obligation is a security interest.

A) True

B) False

6. Building Company adds a warehouse to the property of Corporate Complex, but the owner does not pay. Building files a lien on Corporate's property. The property

A) can be held to guarantee payment of the debt.

B) must be sold to provide payment of the debt.

C) must be returned to the debtor within a certain period of time.

D) none of the choices

7. Bayside Marina borrows funds from Credit Union secured by Bayside's equipment in the marina shops. If Credit Union fails to perfect its claim to the collateral, the claim will be reduced to that of

A) an unsecured creditor.

B) a state of local official.

C) a secured party.

D) a debtor

8. Debt Financing Inc. and Equity Lending Company are secured parties with perfected security interests in property owned by Fleet Shipping Inc. Priority between these security interests is generally determined by

A) the amount of the claim.

B) the custom in the trade.

C) the time of perfection.

D) the "float" of the liens.

9. Kris borrows from Lender Inc. and Mortgage Company, using the same collateral for both loans. Mortgage Company perfects the security interest but Lender does not. Kris defaults on both loans. The party with first rights to the collateral is

A) Kris

B) none of the choices

C) Lender Inc

D) Mortgage company

10. Equity Bank lends funds to Fabrication Company to add a storage unit to Fabrication's factory. Payment of the loan is guaranteed by Fabrication's supply of inventory. The law covering this transaction comes from

A) local building ordinances.

B) state manufacturing regulations.

C) federal banking rules.

D) the Uniform Commercial Code.

11. The right of contribution is a right that the debtor has to receive contributions from the surety or guarantor.

A) True

B) False

12. The payment of Cathy's debt to Debt Collection Corporation is guaranteed by Cathy's personal property. Debt Collection is most likely to perfect its interest by

A) insuring the property for the full amount of its value.

B) calculating the precise amount of the debt.

C) correcting grammatical errors in the parties' written agreement.

D) filing a financing statement with the appropriate authority.

13. Greg borrows funds from Home Bank secured by Greg's car. Greg defaults on the debt. Home Bank's options include

A) retaining the security interest and pursuing a judicial remedy.

B) destroying the collateral and collecting the unpaid debt from Greg

C) having Greg put in debtor's prison until the debt is repaid.

D) taking peaceful possession of the collateral and keeping it.

14. A creditor can demand payment from the surety from the moment that the debt is due.

A) True

B) False

15. Reese applies for a credit card at Sell-Mart. The application gives Sell-Mart a security interest in any goods that Reese buys with the card until she pays for them in full. In this situation, the secured party is

A) reese

B) sell-mart

C) the credit card

D) the goods that are bought with the credit card.

16. A financing statement is a legal term for the debtor's bank statements and list of assets.

A) True

B) False

17. Liens generally do not take priority over other claims to the same property.

A) True

B) False

18. Auto Sales & Finance wants to get paid for its goods and services, so it will not sell goods or lend funds unless payment is guaranteed by some personal property and not just by a promise. This is the concept of

A) bad faith

B) fiduciary duty

C) a secured transaction

D) a fair debt collection practice

19. A writ of execution is a court-ordered seizure and taking into custody of property before a judgment is obtained on a past-due debt.

A) True

B) False

20. Owen is given value by Payday Sales & Finance Company in the form of a commitment to sell goods on credit. In terms of creating an enforceable security interest, this is

A) the only requirement.

B) a factor but not a requirement.

C) not a factor nor a requirement.

D) a requirement