First Federal Bank Wants to Perfect Its Security Interest in the Property

question 56

Multiple Choice

First Federal Bank wants to perfect its security interest in the property of Global Services Company.The most common method of perfecting a se?curity interest is for

• A)the creditor to file a financing statement in a public office.
• B)the creditor to retain possession of the collateral.
• C)the debtor to give value to the creditor.
• D)the interest to attach automatically.

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Definitions:

Marginal Utility

The additional satisfaction or benefit received from consuming one more unit of a product or service.

Asymmetric Information

One of the parties to a transaction has information relevant to the transaction that the other party does not have.

Adverse Selection

A situation in which asymmetric information results in high-quality goods or high-quality consumers being squeezed out of transactions because they cannot demonstrate the quality of the product they are offering for sale.

Fair Bet

A wager in which the expected value to both parties involved is equal; no side has an advantage.