Under the UCC Secured Transactions Article (Article 9), which of the following will perfect a security interest in a negotiable instrument (like a promissory note)?

Answer options:

Filing a financing statement only.

Taking possession of the instrument.

Automatic perfection upon attachment.

Control via a control agreement.

How to approach this question

Match collateral type to perfection method. Instruments = Possession.

Full Answer

B.Taking possession of the instrument.✓ Correct

While filing is permitted for some instruments, taking POSSESSION is the primary and safest method to perfect a security interest in negotiable instruments. For some types, it is the only method.

Common mistakes

Thinking filing works for everything (it doesn't work well for cash or instruments).

Question 54 All questions Question 56

Practice the full CPA REG Practice Exam 2

72 questions · hints · full answers · grading

More questions from this exam

Q01A CPA is representing a client in an IRS examination regarding a complex tax shelter transaction....Hard Q02A tax return preparer is facing a penalty for an understatement of tax liability on a client's re...Hard Q03Taxpayer L received a Statutory Notice of Deficiency (90-day letter) from the IRS regarding a tax...Hard Q04A CPA is sued for common law negligence by a third party who relied on the CPA's audit report. Th...Hard Q05Which of the following communications between a CPA and a client would generally be protected by ...Hard

View all 72 questions →