Secured Transactions 1

Equity holders (owners of shares in a corporation) do not usually obtain security to protect their equity investment because:

• They are prohibited from doing so by law.

• Share ownership sufficiently protects their interest.

• Corporations cannot issue both debt and equity interests.

• Generally, they cannot have their equity investment returned in priority to other interests.

If a creditor is owed $50,000 secured by an interest in the debtor's car worth $30,000, the remaining $20,000 owed to the creditor:

• Is secured by any other assets of the debtor that are similar in nature to the car.

• Is unsecured and may be recovered through court action.

• Is unsecured and must be abandoned by the creditor.

• Is secured by any other assets of the debtor not already pledge to another creditor.

Which of the following steps will provide the creditor with the best status vis-à-vis other creditors?

• Perfection

• Attachment

• Execution of a valid security agreement

• Execution of a valid loan agreement

A lease of land is

• Real property

• Chattels real

• Chose in action

• Chose in possession

Legal possession is recognized by

• An exercise of control over property and an intention to exclude others from control

• Simple custody

• Ownership and an exercise of control over property

• Physical possession of property

Which of the following security interests requires possession by the secured party?

• Floating charge

• Fixed charge

• Chattel mortgage

• Pledge

Which of the following transactions would be covered by the PPSA?

• Gift of a car

• Absolute sale of a trailer

• Lease of a photocopier for more than one year

• Mortgage of a house