Chapter 11 Banking. Creditors' Rights, and Bankruptcy True/False Questions 1. The federal Bank Act regulates all federally chartered Canadian and foreign subsidiary banks 2. It may be less expensive for a business to accept cash over a credit card. 3. Equity financing is borrowing the money for a period of time and repaying the original amount plus interest at the end of the term 4. Debt financing is accomplished by selling shares in a company. 5. Financial institutions are in the business of lending money and the debtor's ability to repay is their primary concem, 6. A security interest is an interest in personal property that secures payment of a debt 7. A secured creditor has priority over other general creditors. 8. A guarantor agrees to pay the debt of another person if that person defaults on payments to the lender 9. A guarantee must be in writing to be enforceable 10. Crowdfunding is a growing popular way to raise funds through the Internet. 11. Insolvency occurs when debtors are unable to meet their debt obligations as they become due. 12. The role of a trustee in bankruptcy is to work with the creditors to ensure payment by the debtor 13. Creditors must accept the proposal for repayment put forth by a debtor under the Bankruptey and Insolvency Act. 14. Debtors are allowed to retain some basic assets such a clothing, furniture, and tools of the trade. 15. A person who knows they are about to become bankrupt can transfer assets to family members to avoid those assets going to creditors. 16. Preferred creditors may take possession of the secured goods and sell them to pay the debt. 17. I'on bankruptcy the bankrupe's cash account rests at zero, even secured creditors will receive nothing Multiple Choice Questions 18. Which of the following is an example of equity financing! A. Borrowing money from a bank B. Borrowing money from a credit C. Selling preferred shares D. Selling personal property 19. Which of the following statements is false? A. A guarantee must be in writing B. A guarantor agrees to pay if debtor defaults C. A guarantor agrees to pay along with the debtor D. A guarantor must agree to any changes in the guarantee 20. Preferred creditors, secured creditors, and unsecured creditors are three basic classes of creditors in a bankruptcy procedure. What is their priority in the proceeding? A. Preferred, secured, and unsecured B. Preferred, unsecured, and secured C. Secured, preferred, and unsecured D. Secured, unsecured, and preferred