1 As a general rule, if more than one creditor has perfected a security interest in the same collateral, the creditors share the proceeds of that property on a pro rata basis, regardless of when each attached or perfected his interest.

A.True

B.False

2 Bob owned a home secured by a mortgage held by Altadena Finance. Bob then bought a refrigerator, entering a secured payment plan with Virginia Appliances. After Bob became insolvent, defaulting on both his mortgage and the refrigerator purchase. Under these circumstances

A.Altadena Finance has priority on the home and the refrigerator. The refrigerator is a fixture to which the mortgagee has priority.

B.Altadena Finance has priority on the home only. Virginia Finance has priority on the refrigerator only

.C.Virginia Appliances has priority on the home and the refrigerator. Once the fixture became part of the real property, the fixture filing takes priority over all other interests

.D.None of the above.

3 A security agreement must accurately describe the property that it seeks to attach.

A.True

B.False

4 Patents, copyrights and other forms of intellectual property may be used as security for a debt.

A.True

B.False

5 Hal's Automotive obtained a line of credit from Gigantor Bank. This line of credit provided that Gigantor had a security interest in property owned by Hal's along with an "after acquired property" clause. Hal's used some of the money to make a down payment on a computerized diagnostic system. The system was bought from CDS, Inc., on a payment plan with CDS retaining a security interest in the diagnostic system until fully paid. Hal then became insolvent, defaulting on all obligations. Under these circumstances,

A.Gigantor's "after acquired property" rights gives them priority to the diagnostic system.

B.CDS's purchase money security interest gives them priority to the diagnostic system.

C.Gigantor and CDS stand in equal position and will share equally the proceeds of the sale of the diagnostic system.

D.The diagnostic system is not personal property to which a security interest can attach. It will therefore lapse to the benefit of all of Hal's creditors, equally.

6 A bona fide purchaser is a customer who buys a secured item of personal property for personal use for value and without any knowledge of the security.

A.True

B.False

7 In order to ensure that someone pays on an obligation, a creditor may obtain a security interest in that person's personal property.

A.True

B.False

8 Which of the following is considered personal property under UCC Article 9?

A.Automobiles

B.Bonds

C.Conditional sales contracts

D.All of the above

9 Nikki bought a car for $26,000, paying $2,000 down and borrowing the remainder in a secured loan from Beach Finance, Inc. She then defaulted on the loan. Beach Finance repossessed the car and sold it at auction for $22,000. After the costs of collection and auction were deducted, Beach received $19,000. Under these circumstances,

A.Beach may recover the remaining $5,000 from Nikki

B.Beach may recover $24,000 from Nikki

C.Beach may recover nothing more; the foreclosure discharged the debt

.D.Beach may recover nothing more; secured interests on personal property are non-recourse.

10 Which of the following may be used to perfect a security interest?

A.Filing a public notice of the security interest.

B.The creditor actually possessing the property

C.Placing notice in a newspaper

D.Both a and bE.Both b and c