Exam 22: Banking System, E-Money, and Financial Reform

Roger drew a check payable to Mary for $50.Mary cleverly raises the check to $500,and negotiates it to Local Liquor Store.Local Liquor then cashes the check at the drawee bank.Roger learns of the alteration when he receives his bank statement,and complains to the bank within six months of learning about the alteration.Which of the following statements best describes the liabilities of these parties?

As a holder,the payee of a check can either demand payment or indorse the check to another person.

When a cashier's check is presented for payment,the issuing bank debits its own account.

When a bank certifies a check,it agrees in advance (1)to accept the check when it is presented for payment and (2)to pay the check out of funds set aside from the customer's account and either placed in a special certified check account or held in the customer's account.

Certified checks are payable at any time from the date they are issued.

When a customer makes a deposit into a bank,a ________ relationship is formed.

Promissory notes are the most common form of negotiable instrument used in the United States.

Banks cannot charge interest on the overdrafts of its customers.

A check where the drawer and payee have accounts at different banks is known as an "on them" item.

A forged check is never "properly payable."

Assume Doug and Eddie both have checking accounts at Local Bank.On Monday morning,Eddie deposits a check from Doug written on Doug's account at Local Bank.The bank issues a provisional credit to Eddie's account.When is the check considered honored?

Certified checks and cashier's checks are types of "bank checks."

A check can be indorsed multiple times before being presented for payment.

The drawer's bank is also known as the payer bank.

The ________ posting rule allows banks to fix an afternoon hour of 2:00 p.m.or later as a cutoff hour for the purpose of processing checks and deposits.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 was designed to increase competition in the banking system.

A bank that pays a stale check in good faith may charge the drawer's account.

Under UCC 4-401(c),to require a bank to abide by a postdated check,the drawer need only postdate the check to some date in the future.

The payee is the party to whom a check is written.

Federal currency reporting laws require financial institutions to report the receipt in a single transaction or a series of related transactions of cash in an amount greater than $5,000.