Which Statement Is Correct About the Creation of a Security

question 40

Multiple Choice

Which statement is correct about the creation of a security interest?

• A)The secured party must give a consumer good to get the security agreement.
• B)A written agreement is necessary to create a security interest.
• C)The secured party must be a bank.
• D)To create a security interest,either a written agreement is necessary or the secured party is in possession of the collateral.
• E)The debtor has no actual rights to the collateral until final payment is made.

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Definitions:

Protective Covenants

Clauses in a loan agreement that limit certain actions of the borrower to protect the lender, ensuring the borrower's ability to repay the debt.

Indenture

Written agreement between the corporation and the lender detailing the terms of the debt issue.

Loan Term

The duration of time over which a loan agreement is in effect, dictating the repayment schedule.

Floating-Rate Bond

A bond whose interest payments fluctuate with the market interest rates, rather than being fixed.