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1. Which of the following are rules established by UCC when determining priority among conflicting claims of creditors?

a. A secured creditor's interest is equal to unsecured creditor's interest.
b. A perfected security interest has priority over mere interest in same collateral.
c. If there is two or more perfected security interest in the same collateral, the last to perfect has priority as it is the most recent interest that has been filed.
d. All of these are correct.

2. A creditor who has repossessed collateral may select to retain it:

a. In all circumstances.
b. In all circumstances unless the secured party receives suitable notice within 21 days.
c. In all circumstances when the debtor willfully did not pay the debt.
d. In all circumstances unless the secured party gets suitable notice within 21 days or in the case of consumer goods, if more than 60 percent of the price has been paid.

3. Ajax Corporation borrowed $50,000 from National Bank, giving National a security interest in its factory equipment. Agreement stated that equipment would be security for this $50,000 loan and any future loans that National made to Ajax.  National filed a valid financing statement.  Over next several months, Ajax borrowed another $100,000 from National. No additional financing statements were filed. Ajax has not made any payments on its loans from National. Ajax defaults on these loans. National requires to foreclose on collateral. Suppose this security agreement is valid and perfected, how much of National's debt is secured?

a. None, as this was not a purchase money situation.
b. Only the first $50,000 because financing statements were not filed on last $100,000.
c. Only the first $50,000 because future advances clauses are not valid.
d. The entire $150,000 is secured.

4. Which of the given is true about distinction between secured and unsecured credit?

a. Secured debt is debt which has already been paid, and unsecured has not yet been paid.
b. Secured debt is expected to be collected, while collection of unsecured debt is doubtful.
c. Secured debt will be collected over more than 1 year, while unsecured debt is expected to be collected within 1 year.
d. Secured debt has collateral associated with it, while unsecured debt has no associated collateral.
e. Secured debt results from a judgment of the court, while unsecured debt results from the agreement of the parties.

5. When debtor fails to pay a debt, and value of collateral is less than the full amount of the debt, which of the given is generally true?

a. The creditor can obtain deficiency judgment against debtor for the amount of debt that was not satisfied from collateral.
b. The creditor should absorb the remaining loss and has no further remedy.
c. The creditor should file a bankruptcy proceeding against the debtor in order to obtain further relief.
d. The creditor should record its security interest before proceeding further.

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