Trevor Goes to the AutoShop and Purchases a New Truck

question 53

Multiple Choice

Trevor goes to the AutoShop and purchases a new truck on credit for his business. He signs an agreement with AutoShop under which the truck is the collateral for AutoShop's loan to him. Trevor then goes to First Bank and signs an agreement for a loan so that he can buy supplies for his business. Do either of these agreements involve a purchase-money security interest?

• A) The agreement with AutoShop is a purchase-money security interest.
• B) The agreement with First Bank is a purchase-money security interest.
• C) Both agreements are a purchase-money security interest.
• D) Neither of the agreements involved a purchase-money security interest.
• E) The agreement with AutoShop is a primary purchase-money security interest and the agreement with First Bank is a secondary purchase-money security interest.

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Definitions:

CFTC

The Commodity Futures Trading Commission, a United States federal agency regulating futures and options markets.

Futures Contract

A standardized legal agreement to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future.

Futures Contract

A standardized legal agreement to buy or sell something at a predetermined price at a specified future date.

Wilshire 5000

A metric assessing the performance of all equity securities based in the U.S. for which price information is easily accessible.