Question 1

A holder in due course of a negotiable instrument takes the instrument free of all defenses to the instrument except those that concern its:

Accepted Answer

A)   validity.
B)   reliability.
C)   adaptability.
D)   collectibility.E) A) and C)
F) All of the above

Question 2

Joe writes a check payable to Advanced Autos.The check is drawn on his checking account with the Progressive Bank.The drawee on this check is:

Accepted Answer

A)   Joe.
B)   Progressive Bank.
C)   Advanced Autos.
D)   the Federal Reserve.E) A) and B)
F) All of the above

Question 3

Which of the following is nonnegotiable?

Accepted Answer

A)   A check written "Pay James Watson."
B)   A note written "I promise to pay James Watson."
C)   A note written "I promise to pay James Watson or bearer."
D)   A draft payable "to the order of bearer."E) B) and C)
F) None of the above

Question 4

What is term for a clause that authorizes a creditor to go into court if the debtor defaults and to have a judgment entered against a debtor without a trial?

Accepted Answer

A)   Power of Attorney
B)   Articles of Incorporation
C)   Commerce treaty
D)   Confession of JudgmentE) A) and C)
F) A) and B)

Question 5

The requirement that,to be negotiable,an instrument must promise or order payment of a fixed amount of money applies:

Accepted Answer

A)   only to principal.
B)   only to interest.
C)   to both principal and interest together.
D)   neither to principal nor interest.E) None of the above
F) All of the above A

Question 6

Shania Watson has a checking account at the Capital Bank of New York.She goes to Lowe's and agrees to buy an electric water heater priced at $700.She writes a check to pay for it.Shania is the _____ of the check.

Accepted Answer

A)   payer
B)   drawer
C)   payee
D)   draweeE) B) and C)
F) None of the above

Question 7

Which of the following can be negotiated or transferred only by indorsement?

Accepted Answer

A)   Order paper
B)   Bearer paper
C)   Cashier's check
D)   Teller's checkE) A) and B)
F) A) and C)

Question 8

To qualify as a negotiable instrument,an instrument in the form of a note must be signed by the:

Accepted Answer

A)   payee.
B)   drawee.
C)   assignee.
D)   maker.E) A) and C)
F) A) and D) D

Question 9

Selena Johnson has a checking account at the Union Bank of New York.She goes to Home Depot and agrees to buy a room heater priced at $200.She writes a check to pay for it.Home Depot is the:

Accepted Answer

A)   payer.
B)   drawer.
C)   payee.
D)   drawee.E) All of the above
F) None of the above

Question 10

A cashier's check is a check for which the same bank is both drawer and drawee.

Accepted Answer

A) True 
 B)False

Question 11

In 1990,Revised Article 3 of the UCC was developed,which now has been adopted by all the states.

Accepted Answer

A) True 
 B)False

Question 12

A typed or rubber stamped signature is sufficient if it is put on the instrument to validate it.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following instruments defines an order directed to a certain person,namely a bank,to pay money from a person's account to a third person?

Accepted Answer

A)   Check
B)   Promissory note
C)   Certificate of deposit
D)   DraftE) A) and D)
F) A) and C)

Question 14

Which of the following statements will cause an instrument to be nonnegotiable?

Accepted Answer

A)   "Payment is subject to the terms of a mortgage dated August 30,2005."
B)   "Payment is secured by a mortgage dated August 30,2005."
C)   "Payment is in consideration of two months' rent."
D)   "Payment to be made 30 days after date,for a note dated August 30,2005."E) A) and B)
F) B) and D)

Question 15

The rate of interest that courts impose on losing parties until they pay the winning parties is known as a(n) :

Accepted Answer

A)   variable rate.
B)   order rate.
C)   judgment rate.
D)   fixed rate.E) B) and C)
F) None of the above

Question 16

A check is NOT negotiable if it:

Accepted Answer

A)   reads "Pay Kim Turner."
B)   states that it is payable only on a certain condition.
C)   is signed with a rubber-stamped signature.
D)   is issued by a drawer who lacks capacity to contract.E) A) and B)
F) A) and C)

Question 17

Checks and drafts are:

Accepted Answer

A)   documents required as evidence for shipment of goods.
B)   documents which detail the transaction between a seller and a buyer.
C)   orders to another person to pay money to a third person.
D)   promises to pay someone money.E) None of the above
F) B) and C)

Question 18

If the description of interest in the instrument does not allow the amount of interest to be ascertained,then interest is payable at the:

Accepted Answer

A)   variable rate.
B)   judgment rate.
C)   order rate.
D)   fixed rate.E) B) and C)
F) A) and B)

Question 19

The term commercial paper is defined as?

Accepted Answer

A)   A contract for the payment of money.
B)   An agreement between nations for the benefit of commerce.
C)   A receipt of goods barter between businesses.
D)   A warranty on good shipped in international commerce.E) A) and D)
F) None of the above

Question 20

A promissory note is a credit instrument.

Accepted Answer

A) True 
 B)False  True

Exam 31: Negotiable Instruments

A holder in due course of a negotiable instrument takes the instrument free of all defenses to the instrument except those that concern its:

Correct AnswerverifiedShow Answer

Joe writes a check payable to Advanced Autos.The check is drawn on his checking account with the Progressive Bank.The drawee on this check is:

Correct AnswerverifiedShow Answer

Which of the following is nonnegotiable?

Correct AnswerverifiedShow Answer

What is term for a clause that authorizes a creditor to go into court if the debtor defaults and to have a judgment entered against a debtor without a trial?

Correct AnswerverifiedShow Answer

The requirement that,to be negotiable,an instrument must promise or order payment of a fixed amount of money applies:

Correct AnswerverifiedA

Shania Watson has a checking account at the Capital Bank of New York.She goes to Lowe's and agrees to buy an electric water heater priced at $700.She writes a check to pay for it.Shania is the _____ of the check.

Correct AnswerverifiedShow Answer

Which of the following can be negotiated or transferred only by indorsement?

Correct AnswerverifiedShow Answer

To qualify as a negotiable instrument,an instrument in the form of a note must be signed by the:

Correct AnswerverifiedD

Selena Johnson has a checking account at the Union Bank of New York.She goes to Home Depot and agrees to buy a room heater priced at $200.She writes a check to pay for it.Home Depot is the:

Correct AnswerverifiedShow Answer

A cashier's check is a check for which the same bank is both drawer and drawee.

Correct AnswerverifiedShow Answer

In 1990,Revised Article 3 of the UCC was developed,which now has been adopted by all the states.

Correct AnswerverifiedShow Answer

A typed or rubber stamped signature is sufficient if it is put on the instrument to validate it.

Correct AnswerverifiedShow Answer

Which of the following instruments defines an order directed to a certain person,namely a bank,to pay money from a person's account to a third person?

Correct AnswerverifiedShow Answer

Which of the following statements will cause an instrument to be nonnegotiable?

Correct AnswerverifiedShow Answer

The rate of interest that courts impose on losing parties until they pay the winning parties is known as a(n) :

Correct AnswerverifiedShow Answer

A check is NOT negotiable if it:

Correct AnswerverifiedShow Answer

Checks and drafts are:

Correct AnswerverifiedShow Answer

If the description of interest in the instrument does not allow the amount of interest to be ascertained,then interest is payable at the:

Correct AnswerverifiedShow Answer

The term commercial paper is defined as?

Correct AnswerverifiedShow Answer

A promissory note is a credit instrument.

Correct AnswerverifiedTrue

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
D

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
True