Exam 12: Financing

An advising bank assumes no liability for paying the letter of credit.

A bearer paper can be converted to an order paper ________.

In a letter of credit transaction, an advising bank is entitled to reimbursement from the issuing bank if the documents it receives are in order.

The common law does not require a bill of exchange to be dated.

Which of the following terms refers to a bill of exchange on which the drawer and the payee are the same person?

Both the common law and the ULB specify that ________.

The person who issues a bill of exchange is referred to as a ________.

Which of the following types of endorsements' payment depends on the occurrence of an event?

Under the ULB, only banks can become holders of an endorsement for collection.

What are the rights and responsibilities of the account party in a letter of credit transaction?

In a conditional endorsement, no subsequent holder has the right to enforce the payment against a conditional endorser until the condition is met.

According to the fictitious payee rule, when the instrument is issued in the name of a fictitious payee, the person purporting to be that payee can make an effective endorsement.

Describe the ways in which a bill or note can be paid.

What are the requirements placed on the form of a bill of exchange under the ULB?

In most common law countries, the person best able to prevent the forgery from happening is held liable for a forged instrument.

Which of the following definitions describes an endorsee of a note?

When a bank is the maker promising to repay money it has received, plus interest, the promissory note is called a ________.

Common law differs from the Uniform Law on Bills of Exchange and Promissory Notes (ULB) in that the common law ________.

All restrictive endorsements prevent the further transfer or negotiation of a bill or note.

________ is a type of countertrade in which a foreign supplier employs a processor to process raw materials that the processor cannot afford to purchase. The supplier then sells the processed goods to a third party to pay for the processing.