Consider the Following Statements About the Use of Personal Property

question 79

Multiple Choice

Consider the following statements about the use of personal property as security for a creditor in a creditor-debtor transaction. Indicate the False statement.

• A) If the transaction involves the use of consumer goods as collateral, upon default of payment by the debtor, the creditor can seize the goods and sell them, but also always retains the right to sue the debtor on his personal covenant to pay for any deficiency.
• B) Regardless of the type of personal property involved, whether tangible or intangible, as long as it is being used as security then the transaction is governed by the Personal Property Security Act, and therefore an unpaid creditor may be able to repossess them.
• C) Real estate professionals need to be aware of the Personal Property Security Act because items that constitute fixtures under real property law may also constitute chattel security, and thus an unpaid creditor may be able to repossess them.
• D) Before a creditor who has been promised an interest in personal property as security can claim priority rights, two processes must have taken place: the security interest must have attached to the collateral item, and the security must have been perfected.
• E) If the required procedures have taken place, a potential buyer from an unscrupulous debtor who has already given personal property as security will be protected; i.e., the creditor will either have registered his interest in the Personal Property Registry or will have actual possession of the collateral.

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Definitions:

Short-Run Supply Curve

A supply curve that shows the quantity of a product a firm in a purely competitive industry will offer to sell at various prices in the short run; the portion of the firm’s short-run marginal cost curve that lies above its average-variable-cost curve.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the number of units produced.

Average Variable Cost

The total variable cost of production divided by the quantity of output produced, representing the variable cost per unit of output.

Purely Competitive Market

A market structure characterized by many buyers and sellers, free entry and exit, and a homogeneous product, leading to price determination by market forces.