FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 23: The Essentials of Negotiability

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

True/False

Review LaterAdd Note

Review Later

The recipient of a negotiable instrument becomes a holder regardless of the form of the transfer.

A) True
B) False

Correct Answer

verified

Show Answer

Question 2

Multiple Choice

Review LaterAdd Note

Review Later

Sarah has a checking account at Secure Bank.Sarah buys her roommate Sophie's two tickets to a Broadway musical for $200.Sarah writes Sophie a check for the tickets.In this situation,Secure Bank is the

A) drawee.
B) indorser.
C) payee.
D) drawer.

E) B) and D)
F) B) and C)

Correct Answer

verified

A

Question 3

Multiple Choice

Review LaterAdd Note

To borrow money to finance the start-up of his business,Bob executes an instrument in favor of City Bank.For the instru?ment to be negotiable,the signature must be

On April 1 Richard arranges to buy a sixteen-speed bike from his neighbor Phil for $500.Phil agrees to deliver the bike on May 1.Richard writes a draft for $500 payable to Phil on May 1.In this situation,the draft is a

An instrument that states simply "I.O.U." is NOT negotiable.

On a sheet of paper,Elle writes,without her signature,"I acknowledge that I owe Frank $600,payable out of the proceeds of the sale of my car,a 1995 Honda Civic,which I promise to advertise 'For Sale' next week.Payment is to be made on or before six months from today." What type of instrument is this? Is it nego?tiable? If not,why not?

A check "payable to the order of bearer" is neither an order instrument nor a bearer instrument.

An instrument "payable to bearer" is transferable but not negotiable.

The writing evidencing a negotiable instrument must be on material that lends itself to permanence.

USA Gasoline Corporation signs an instrument that states it is being exe?cuted "in accord with a contract for the sale of 4,000 barrels of oil dated May 1." This instrument is

A check is a draft drawn by a drawer ordering the drawee bank or financial institution to pay a certain amount of money to the holder on demand.

EZ Credit Company signs an instrument payable to the order of Flem that states,"The maker of this note at the date of maturity,May 1,2015,can extend the time of pay?ment,but for no more than a rea?sonable time." This instrument is

Jared writes Lisa a check for $500.Because the check does not specify a time of payment,it is considered a

An instrument that promises to pay "in Microsoft stock" can be negotiable.

An instrument does not need to be portable to be negotiable.

Alpha Company issues a trade acceptance with itself and Beta Company as parties. A trade acceptance is

InterComp normally sells $50,000 worth of software to Power Source,a retail elec?tronics store,each summer on terms requiring payment in sixty days. One year,InterComp wants cash,but Power Source wants the usual sixty days. To meet both needs,the parties can arrange

Rubber stamp signatures can be legally binding signatures.

A check is not negotiable if it is payable on demand or at a definite time.

Opal signs a promissory note payable to the order of Payday Loan Company.The note states that it is payable "with interest at the legal rate." This note is