Question 1

Inventory may be used as collateral for a loan.If it is,the inventory is classified as:

Accepted Answer

A)  intangible property
B)  tangible property
C)  intellectual property
D)  real property
E)  gross propertyF) A) and D)
G) B) and E)

Question 2

To be ordinary holder of a negotiable instrument,the holder must give value for it,take it without knowledge that it is overdue or defective,and must take it in good faith.

Accepted Answer

A) True 
 B)False

Question 3

Negotiable instruments payable "to bearer" are considered the safest form.

Accepted Answer

A) True 
 B)False

Question 4

Most creditors seek information about debtors from:

Accepted Answer

A)  trade associations
B)  credit reporting agencies
C)  customer financial statements
D)  banks
E)  all of the other choicesF) A) and B)
G) C) and D)

Question 5

The mortgagee is the debtor who obtains a mortgage.

Accepted Answer

A) True 
 B)False

Question 6

Payment practices vary around the world.Islamic law is interpreted by many Muslims to mean that interest payments are prohibited by the Koran.In practice,this means that in countries that practice Islamic law:

Accepted Answer

A)  there is no borrowing or lending
B)  all borrowing is done at zero interest rate
C)  borrowing is done by lending arrangements that pay the equivalent of interest
D)  interest payments must be donated to religious organizations
E)  none of the aboveF) A) and E)
G) None of the above

Question 7

The most common lien on personal property is:

Accepted Answer

A)  a mechanic's lien
B)  a potential lien
C)  an integrated lien
D)  a mortgage lien
E)  none of the other choicesF) All of the above
G) A) and E)

Question 8

If the borrower is unable to pay the mortgage,the mortgagee has the right to:

Accepted Answer

A)  fore-close on the property
B)  obtain 50% of the value of the property from the borrower
C)  take all of the borrower's tangible possessions
D)  have the borrower put in prison
E)  none of the other choices are correctF) A) and E)
G) A) and D)

Question 9

Most companies that file Chapter 11 bankruptcies are billion dollar or larger firms.

Accepted Answer

A) True 
 B)False

Question 10

The primary objective of the trustee is:

Accepted Answer

A)  to deplete the debtor's estate
B)  to protect general creditors first
C)  to ensure that the debtor's exempt property is liquidated
D)  to maximize the amount of the debtor's assets available for distribution to creditors
E)  to maximize the amount of the debtor's assets that the trustee is paidF) D) and E)
G) B) and E)

Question 11

A(n) ______________ is one who lends money to,or allows goods or services to be purchased on credit by,another party,the debtor.

Accepted Answer

A)  creditor
B)  purchaser
C)  lender
D)  financer
E)  debteeF) B) and C)
G) A) and B)

Question 12

The law governing secured loans for personal property is found in Art.2 of the UCC.

Accepted Answer

A) True 
 B)False

Question 13

To attach a security interest,the agreement must be signed by the debtor.

Accepted Answer

A) True 
 B)False

Question 14

A creditor who obtains an interest in the property of a debtor without the debtor's express agreement may obtain:

Accepted Answer

A)  a fine
B)  a lien
C)  a misdemeanor
D)  a dessein
E)  a subrogationF) C) and D)
G) A) and C)

Question 15

Which of the following is one of the UCC's requirements for an instrument to be negotiable:

Accepted Answer

A)  it must be written
B)  it must state a certain sum of money
C)  it must be made out "to order" or "to bearer"
D)  it must be payable on demand or at a specified time
E)  all of the other specific choices are correctF) B) and E)
G) C) and D)

Question 16

Chapter 13 bankruptcy largely involved debt rescheduling.

Accepted Answer

A) True 
 B)False

Question 17

FACT Pattern 12-1
Gena owns Gena's Gourmet Pasta.She sold her pasta only in New Jersey.It was a success and the company expanded throughout the Northeast.During expansion Gena borrowed $350,000 from First Fidelity Bank.Because Gena was a new company,First Fidelity required that a third party also guarantee the loan.Marvin guaranteed her loan.
Everything looked good at Gena's Gourmet Pasta until January 2009,when Larry's Linguine opened.Larry was a hard competitor and soon Gena was losing business.The sales reduction meant Gena had a hard time making her payments to First Fidelity.After six months,Gena defaulted on her loan.Unable to meet her bills,Gena called it quits in September 2008,and filed for bankruptcy.
Please answer multiple-choice questions 1 to 10 based on these facts.
-Refer to Fact Pattern 12-1.Assuming that Gena pledges not only her pasta makers,but also her 1/2 acre piece of property in Montclair,NJ.Once she defaults on her loan payments to First Fidelity the bank may:

Accepted Answer

A)  start judicial proceedings against her
B)  seize all of her property to settle the debt
C)  seize her non-exempt property to settle the debt
D)  start judicial proceedings against her and seize her non-exempt property to settle the debt
E)  the bank cannot do anything until it files its claim with the governor of the stateF) B) and D)
G) All of the above

Question 18

When the maker promises to repay the note in speciﬁed installments,the note is a(n) :

Accepted Answer

A)  fixed payment note
B)  property note
C)  collateral note
D)  real estate property note
E)  none of the other choices are correctF) D) and E)
G) All of the above

Question 19

People who have above average income are more likely to use Chapter 13 bankruptcy rather than Chapter 7.

Accepted Answer

A) True 
 B)False

Question 20

In Chapter 13 bankruptcy,there is a confirmation plan worked out by the trustee.

Accepted Answer

A) True 
 B)False

Exam 12: Negotiable Instruments, credit, and Bankruptcy

To attach a security interest,the agreement must be signed by the debtor.

Correct Answer
verified

A creditor who obtains an interest in the property of a debtor without the debtor's express agreement may obtain:

Correct Answer
verified

A(n) ______________ is one who lends money to,or allows goods or services to be purchased on credit by,another party,the debtor.

Correct Answer
verified

Which of the following is one of the UCC's requirements for an instrument to be negotiable:

Correct Answer
verified

The law governing secured loans for personal property is found in Art.2 of the UCC.

Correct Answer
verified

People who have above average income are more likely to use Chapter 13 bankruptcy rather than Chapter 7.

Correct Answer
verified

In Chapter 13 bankruptcy,there is a confirmation plan worked out by the trustee.

Correct Answer
verified

Inventory may be used as collateral for a loan.If it is,the inventory is classified as:

Correct Answer
verified

If the borrower is unable to pay the mortgage,the mortgagee has the right to:

Correct Answer
verified

To be ordinary holder of a negotiable instrument,the holder must give value for it,take it without knowledge that it is overdue or defective,and must take it in good faith.

Correct Answer
verified

The primary objective of the trustee is:

Correct Answer
verified

Payment practices vary around the world.Islamic law is interpreted by many Muslims to mean that interest payments are prohibited by the Koran.In practice,this means that in countries that practice Islamic law:

Correct Answer
verified

Chapter 13 bankruptcy largely involved debt rescheduling.

Correct Answer
verified

The most common lien on personal property is:

Correct Answer
verified

Negotiable instruments payable "to bearer" are considered the safest form.

Correct Answer
verified

Most companies that file Chapter 11 bankruptcies are billion dollar or larger firms.

Correct Answer
verified

When the maker promises to repay the note in speciﬁed installments,the note is a(n) :

Correct Answer
verified

Correct Answer
verified

Most creditors seek information about debtors from:

Correct Answer
verified

The mortgagee is the debtor who obtains a mortgage.

Correct Answer
verified

Exam 12: Negotiable Instruments, credit, and Bankruptcy

To attach a security interest,the agreement must be signed by the debtor.

Correct AnswerverifiedShow Answer

A creditor who obtains an interest in the property of a debtor without the debtor's express agreement may obtain:

Correct AnswerverifiedShow Answer

A(n) ______________ is one who lends money to,or allows goods or services to be purchased on credit by,another party,the debtor.

Correct AnswerverifiedShow Answer

Which of the following is one of the UCC's requirements for an instrument to be negotiable:

Correct AnswerverifiedShow Answer

The law governing secured loans for personal property is found in Art.2 of the UCC.

Correct AnswerverifiedShow Answer

People who have above average income are more likely to use Chapter 13 bankruptcy rather than Chapter 7.

Correct AnswerverifiedShow Answer

In Chapter 13 bankruptcy,there is a confirmation plan worked out by the trustee.

Correct AnswerverifiedShow Answer

Inventory may be used as collateral for a loan.If it is,the inventory is classified as:

Correct AnswerverifiedShow Answer

If the borrower is unable to pay the mortgage,the mortgagee has the right to:

Correct AnswerverifiedShow Answer

To be ordinary holder of a negotiable instrument,the holder must give value for it,take it without knowledge that it is overdue or defective,and must take it in good faith.

Correct AnswerverifiedShow Answer

The primary objective of the trustee is:

Correct AnswerverifiedShow Answer

Payment practices vary around the world.Islamic law is interpreted by many Muslims to mean that interest payments are prohibited by the Koran.In practice,this means that in countries that practice Islamic law:

Correct AnswerverifiedShow Answer

Chapter 13 bankruptcy largely involved debt rescheduling.

Correct AnswerverifiedShow Answer

The most common lien on personal property is:

Correct AnswerverifiedShow Answer

Negotiable instruments payable "to bearer" are considered the safest form.

Correct AnswerverifiedShow Answer

Most companies that file Chapter 11 bankruptcies are billion dollar or larger firms.

Correct AnswerverifiedShow Answer

When the maker promises to repay the note in speciﬁed installments,the note is a(n) :

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Most creditors seek information about debtors from:

Correct AnswerverifiedShow Answer

The mortgagee is the debtor who obtains a mortgage.

Correct AnswerverifiedShow Answer

Correct Answer
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