A Security Agreement May Provide That the Security Interest Attaches

question 137

True/False

A security agreement may provide that the security interest attaches to property that was not originally in the possession of the debtor when the agreement was executed.This interest is usually referred to as a transparent lien.

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Definitions:

Face Rate

The interest rate stated on the face of a bond or a loan document, which determines the interest payments that the issuer will make.

Contract Rate

This refers to the interest rate stated in a contract that determines the amount of interest owed on a loan or financial agreement.

Stated Rate

The interest rate expressed in the terms of a loan or investment agreement, not necessarily reflecting the actual yield.

Effective Rate

The effective rate is the actual interest rate on a loan or financial product, taking into account the compounding of interest, as opposed to the nominal rate.