Which of the Following Is True of the Rule of Priorities

question 42

Multiple Choice

Which of the following is true of the rule of priorities regarding the disposal of a debtor's property when the debtor defaults?

• A) Persons who become lien creditors before or after the security interest is perfected win.
• B) If the security interest was perfected at the time of filing for bankruptcy, the bankruptcy trustee can take the collateral.
• C) The Bankruptcy Act provides that a bankruptcy trustee can avoid a transfer of an interest of the debtor in property to or for the benefit of a creditor.
• D) A perfected purchase-money security interest in goods other than inventory or livestock has priority over a conflicting security interest in the same goods.
• E) A mortgage has priority over a perfected security in fixtures, even if the security interest is a purchase-money security interest.

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Definitions:

Adam Smith

An 18th-century Scottish economist and philosopher, best known for his theories on capitalism and the invisible hand of the market.

Free Market

A system of voluntary exchange in which every agent is free to produce, buy, and sell “as the market will bear,” without interference or standards set by any outside authority.

Economic Arrangements

The structured and systemic ways in which economic activities and resources are organized, distributed, and managed within a society or between entities.

Minimal Government

A political philosophy that advocates for a government with the least amount of power necessary to maintain social order and protect individual rights.