Which of the Following Is False Regarding a Creditor's Rights

question 34

Multiple Choice

Which of the following is false regarding a creditor's rights to collateral upon a debtor's default?

• A) If a debtor defaults on a loan, the secured party can take possession of the collateral so long as the debtor does not breach the peace.
• B) Under the UCC, the secured party can sell, lease, or transfer the collateral in any commercially reasonable method.
• C) Regardless of where the collateral is sold, the secured party must strive to receive the best price for the collateral.
• D) Instead of disposing of the collateral, the secured party may choose to keep the collateral in full or partial satisfaction of the debt.
• E) A debtor in default has no rights in regard to whether collateral is retained by the secured party or sold.

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Definitions:

Outstanding Stock

Shares of a corporation that have been issued and are currently held by investors, including public shareholders and company insiders.

Authorized Stock

The maximum number of shares a corporation is legally permitted to issue, as specified in its corporate charter.

Noncumulative Nonparticipating

Noncumulative nonparticipating refers to a type of preferred stock where dividends do not accumulate if not declared and the stockholders do not participate in additional corporate earnings beyond the specified dividend rate.

Cash Dividends

Payments made by a company to its shareholders, usually in the form of cash, out of its profits or reserves.