A purchase money security interest
A) will be automatically subordinate to any general security agreement, even if registered within the specified time period.
B) will prevail over a general security agreement covering all of a merchant's assets if it registered within the specified time period.
C) is also known as a floating charge.
D) is now obsolete in light of the Personal Property Security Act.
E) is prohibited in most provinces.

Question

Quizplus · Accepted Answer

A purchase money security interest (PMSI) gives the lender of the funds used to purchase the collateral (usually goods) a priority interest over other creditors, including those with a general security agreement, provided the PMSI is perfected (registered) within the specified time period. This makes option B correct.

A Purchase Money Security Interest