Exam (elaborations)
LEGL 4400 Test 2 questions with complete solutions 2024
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LEGL 4400 Test 2 questions with complete solutions 2024
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LEGL 4400 Test 2What is capital? - correct answer ✔resources needed and used to increase
payback in the future
sources of funding - correct answer ✔-retained earnings
-equity capital
-debt capital (bonds and loans)
promissory note - correct answer ✔a contract between the debtor and
creditor outlining the terms of the loan
default - correct answer ✔breach obligation of the promissory note
what effect does putting up collateral have on interest rates - correct answer
✔it lowers risk for creditors, therefore lowering the interest rate
how to attach the security interest to the collateral - correct answer ✔1.
creditor gives value
2. debtor has rights in the collateral
3. a security agreement (unless creditor possesses collateral)
What's required in a security interest? - correct answer ✔1. ID the parties
2. describe collateral w some level of precision
3. terms of the security interest
4. authenticated by debtor (usually signed)`
, Why secured transactions? - correct answer ✔-access to capital
-risk is a big issue
-collateral reduces lending risk
types of collateral - correct answer ✔-goods
-indispensable paper
-intangibles
downfall of attachment - correct answer ✔only effective against the debtor
and not third parties
DOTS - correct answer ✔-debtor
-other creditors
-trustee in bankruptcy
-subsequent purchasers
perfection= attachment + ____ - correct answer ✔1. filing of financial
statement
2. possession of collateral by the secured party
3. automatic perfection
4. temporary perfection allowed under the code
5. secured party taking control of collateral
PMSI - correct answer ✔purchase money security interest
-in consumer goods always satisfies perfection
What guides and controls secured transactions? - correct answer ✔the UCC
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