Question 1

In the context of a draft,a drawee is the party who ________.

Accepted Answer

A)   writes an order to a second party
B)   pays the money stated in the draft
C)   writes an order for the draft
D)   receives the money from the draftE) A) and B)
F) A) and C)

Question 2

Which of the following is true about an allonge?

Accepted Answer

A)   It must contain the name of a payee to be valid.
B)   It must be accepted by the payee to be valid.
C)   It must be affixed to the indorsement.
D)   It must be provided only on demand.E) B) and D)
F) A) and B)

Question 3

When an indorser includes some specific instruction in an indorsement,it is known as a(n) ________ indorsement.

Accepted Answer

A)   blank
B)   institutional
C)   restrictive
D)   qualifiedE) B) and D)
F) B) and C)

Question 4

Jumbo CDs are CDs of under $100,000.

Accepted Answer

A) True 
 B)False

Question 5

Security that lenders sometimes require the maker of a note to post for the repayment of the note is known as collateral.

Accepted Answer

A) True 
 B)False

Question 6

Transfer to subsequent parties by negotiation is accomplished by placing an indorsement on the instrument.

Accepted Answer

A) True 
 B)False

Question 7

Shawn draws a bearer check that is payable on January 2,2014.This check is an example of a(n) ________ instrument.

Accepted Answer

A)   order
B)   time
C)   demand
D)   indorsedE) None of the above
F) B) and D)

Question 8

An indorsement that does not specify a particular indorsee is known as a ________.

Accepted Answer

A)   blank indorsement
B)   special indorsement
C)   qualified indorsement
D)   restrictive indorsementE) A) and C)
F) C) and D)

Question 9

Agreements in the form of tape recordings and video recordings are considered negotiable instruments.

Accepted Answer

A) True 
 B)False

Question 10

A restricted indorsement contains the signature of an indorser and specifies a person (indorsee)to whom the indorser intends the instrument to be payable.

Accepted Answer

A) True 
 B)False

Question 11

For a certificate of deposit,the depositor is the maker of the certificate.

Accepted Answer

A) True 
 B)False

Question 12

An indorsement is the signature of a signer,other than as a maker,a drawer,or an acceptor,that is placed on an instrument to negotiate it to another person.

Accepted Answer

A) True 
 B)False

Question 13

A ________ is a two-party negotiable instrument that is an unconditional written pledge by one party to pay money to another party.

Accepted Answer

A)   bill of exchange
B)   check
C)   certificate of deposit
D)   promissory noteE) B) and C)
F) B) and D)

Question 14

One of the benefits of a negotiable instrument is that it can be used as a substitute for the assets owned by the drawer of the instrument.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following can be claimed by merely having possession of the instrument?

Accepted Answer

A)   a certificate of deposit
B)   an allonge
C)   an order instrument
D)   a bearer instrumentE) None of the above
F) C) and D)

Question 16

Emily executes a promissory note in the name of Sonia but does not specify a time for repayment.This promissory note is an example of a(n) ________ instrument.

Accepted Answer

A)   order
B)   time
C)   demand
D)   indorsedE) A) and B)
F) A) and C)

Question 17

Marla owes Mathew $2,500.Mathew wants Marla to pay that amount to Harry to whom Mathew owes the same amount.Mathew draws a negotiable instrument which promises that Marla will pay Harry $2,500.What instrument has Mathew drawn? Explain the different parties involved in the instrument.

Accepted Answer

In the scenario,Mathew has executed a dr...

Question 18

What are prepayment and acceleration clauses? How do these clauses help the borrower?

Accepted Answer

A clause in an instrument that permits t...

Question 19

In order to be negotiable,a promissory note must contain an unconditional ________.

Accepted Answer

A)   acknowledgement of debt with or without a promise to pay
B)   order to a drawee to pay a payee
C)   written promise to pay
D)   acknowledgement of debt with a conditional promise to payE) A) and B)
F) A) and C)

Question 20

A promissory note is a three-party instrument.

Accepted Answer

A) True 
 B)False

Exam 20: Creation and Transfer of Negotiable Instruments

A restricted indorsement contains the signature of an indorser and specifies a person (indorsee)to whom the indorser intends the instrument to be payable.

Correct AnswerverifiedShow Answer

Transfer to subsequent parties by negotiation is accomplished by placing an indorsement on the instrument.

Correct AnswerverifiedShow Answer

When an indorser includes some specific instruction in an indorsement,it is known as a(n) ________ indorsement.

Correct AnswerverifiedShow Answer

One of the benefits of a negotiable instrument is that it can be used as a substitute for the assets owned by the drawer of the instrument.

Correct AnswerverifiedShow Answer

In the context of a draft,a drawee is the party who ________.

Correct AnswerverifiedShow Answer

A promissory note is a three-party instrument.

Correct AnswerverifiedShow Answer

An indorsement that does not specify a particular indorsee is known as a ________.

Correct AnswerverifiedShow Answer

Security that lenders sometimes require the maker of a note to post for the repayment of the note is known as collateral.

Correct AnswerverifiedShow Answer

An indorsement is the signature of a signer,other than as a maker,a drawer,or an acceptor,that is placed on an instrument to negotiate it to another person.

Correct AnswerverifiedShow Answer

Marla owes Mathew $2,500.Mathew wants Marla to pay that amount to Harry to whom Mathew owes the same amount.Mathew draws a negotiable instrument which promises that Marla will pay Harry $2,500.What instrument has Mathew drawn? Explain the different parties involved in the instrument.

Correct AnswerverifiedIn the scenario,Mathew has executed a dr...View AnswerShow Answer

What are prepayment and acceleration clauses? How do these clauses help the borrower?

Correct AnswerverifiedA clause in an instrument that permits t...View AnswerShow Answer

In order to be negotiable,a promissory note must contain an unconditional ________.

Correct AnswerverifiedShow Answer

Emily executes a promissory note in the name of Sonia but does not specify a time for repayment.This promissory note is an example of a(n) ________ instrument.

Correct AnswerverifiedShow Answer

Agreements in the form of tape recordings and video recordings are considered negotiable instruments.

Correct AnswerverifiedShow Answer

For a certificate of deposit,the depositor is the maker of the certificate.

Correct AnswerverifiedShow Answer

Which of the following can be claimed by merely having possession of the instrument?

Correct AnswerverifiedShow Answer

Jumbo CDs are CDs of under $100,000.

Correct AnswerverifiedShow Answer

A ________ is a two-party negotiable instrument that is an unconditional written pledge by one party to pay money to another party.

Correct AnswerverifiedShow Answer

Shawn draws a bearer check that is payable on January 2,2014.This check is an example of a(n) ________ instrument.

Correct AnswerverifiedShow Answer

Which of the following is true about an allonge?

Correct AnswerverifiedShow Answer

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In the scenario,Mathew has executed a dr...
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A clause in an instrument that permits t...
View Answer

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