CCP UCC & Secured Transactions 2

Question 1

Under UCC Article 9, which of the following best describes a 'purchase money security interest' (PMSI)?

Accepted Answer

A security interest taken by the seller or lender to finance the debtor's acquisition of the collateral

Answer

A PMSI is created when a seller retains a security interest in goods sold on credit or when a lender finances the debtor's acquisition of specific collateral.

Question 2

A secured party with a perfected security interest in inventory has a PMSI. What must the secured party do to have super-priority over conflicting security interests in that inventory?

Accepted Answer

Both file before delivery and notify prior secured parties before delivery

Answer

For inventory PMSI super-priority, the secured party must both file a financing statement before the debtor receives the inventory and send authenticated notification to holders of conflicting security interests.

Question 3

Under UCC Article 9, what is the effect of a 'continuation statement' filed by a secured party?

Accepted Answer

It extends the effectiveness of a financing statement for an additional 5 years

Answer

A continuation statement, filed within 6 months before expiration, extends the financing statement's effectiveness for 5 more years from the original lapse date.

Question 4

Which of the following collateral types is perfected by filing a financing statement in most U.S. states under UCC Article 9?

Accepted Answer

Equipment used in a business

Answer

Equipment is typically perfected by filing a financing statement, whereas consumer goods may be automatically perfected (PMSI), titled vehicles are covered by title statutes, and deposit accounts are perfected by control.

Question 5

Under UCC Article 9, what is the concept of 'proceeds' in the context of secured transactions?

Accepted Answer

Whatever is received upon sale, exchange, collection, or disposition of collateral

Answer

Proceeds include whatever is received when collateral is sold, exchanged, collected, or otherwise disposed of, and a perfected security interest in collateral automatically extends to identifiable proceeds.

(CCP) Certified Credit Professional Practice Test

(CCP) Certified Credit Professional Practice Test

CCP UCC & Secured Transactions 2