1. Liza borrows money from First Finance Company for miscellaneous expenses. Liza and First Finance agree that Liza's diamond ring shall serve as collateral for the loan. Two weeks later, Liza takes a loan from Second Finance Company listing the same diamond ring as collateral. Neither First Finance nor Second Finance takes any additional steps. Liza defaults on both loans. Second Finance demands possession of the diamond ring and Liza gives it to them. Which of the following statements regarding this set of facts is
true?
A. Both First Finance and Second Finance possess equal rights in the diamond ring and must equally divide any proceeds from the sale of the ring.
B. First Finance Company possesses the priority claim because it loaned the money to Liza before Second Finance.
C. Neither finance company possesses a valid security interest in the diamond ring, and neither possesses any remedy due to the failure to file a financing statement.
D. Second Finance Company possesses the priority claim because it perfected its security interest first.
2. What type of life insurance would most likely be used to cover the outstanding balance of a home
mortgage?
A. Universal life
End of exam
B. Straight life
C. Endowment
D. Decreasing term insurance
3. Victor applies for life insurance. On the application, when asked if he had ever been diagnosed with
cancer, he falsely said no. Later Victor died, and the insurance company found out about the previous
diagnosis of cancer and refused to pay. What were the most likely grounds?
A. Failure to pay premiums
B. Estoppel
C. Misrepresentation
D. Concealment
4. Tom is a consumer with a lot of credit card debt who wants to get a clean start and get rid of all of his
debts. If he qualifies, the best chapter in bankruptcy for Tom is Chapter
A. 7. C.11.
B. 13. D.12.