Question 1

If a payer bank wrongfully dishonors a check,it is liable to the drawer for damages caused by criminal prosecution.

Accepted Answer

A) True 
 B)False

Question 2

When a bank pays a check that has been materially altered to a higher amount,assuming the bank is given appropriate notice when the drawer discovers the alteration,the bank:

Accepted Answer

A)  cannot charge the depositor's account. 
B)  can charge the depositor's account for the original amount of the check, but cannot recover the additional amount from anyone. 
C)  can charge the depositor's account for the original amount of the check, and recover the additional amount only from the person who altered the check. 
D)  can charge the depositor's account for the original amount of the check, and recover the additional amount from the person who presented the check for payment, even if that person did not know the check was altered. 
E)  can charge the depositor's account for the original amount of the check, and recover the additional amount from the person who presented the check for payment, but only if that person knew that the check was altered. 
A)  cannot charge the depositor's account. 
B)  can charge the depositor's account for the original amount of the check, but cannot recover the additional amount from anyone. 
C)  can charge the depositor's account for the original amount of the check, and recover the additional amount only from the person who altered the check. 
D)  can charge the depositor's account for the original amount of the check, and recover the additional amount from the person who presented the check for payment, even if that person did not know the check was altered. 
E)  can charge the depositor's account for the original amount of the check, and recover the additional amount from the person who presented the check for payment, but only if that person knew that the check was altered.

Question 3

One major benefit of using a wire transfer is the speed of the transaction.

Accepted Answer

A) True 
 B)False

Question 4

The only wire payment system is the Federal Reserve wire transfer network.

Accepted Answer

A) True 
 B)False

Question 5

The Uniform Commercial Code places the risk of loss of an incomplete check on the payee.

Accepted Answer

A) True 
 B)False

Question 6

A principal-agency relationship is created between a customer and a bank:

Accepted Answer

A)  only if the customer deposits a check that the bank must collect for the customer. 
B)  any time the customer deposits an amount into the customer's checking account. 
C)  only when the customer writes a check against her account. 
D)  if the customer deposits a check that the bank must collect for the customer, or if the customer writes a check against his or her account. 
E)  if the customer has an overdraft and the bank needs to collect. 
A)  only if the customer deposits a check that the bank must collect for the customer. 
B)  any time the customer deposits an amount into the customer's checking account. 
C)  only when the customer writes a check against her account. 
D)  if the customer deposits a check that the bank must collect for the customer, or if the customer writes a check against his or her account. 
E)  if the customer has an overdraft and the bank needs to collect.

Question 7

A written stop-payment order can be renewed in writing for additional ________ periods.

Accepted Answer

A)  one-month 
B)  three-month 
C)  six-month 
D)  one-year 
E)  three-year 
A)  one-month 
B)  three-month 
C)  six-month 
D)  one-year 
E)  three-year

Question 8

The Dodd-Frank Wall Street Reform and Consumer Protection Act reorganizes federal government supervision of the banking system,regulates previously unregulated financial products and institutions,and adds a new consumer protection agency to protect consumers from abusive lending and banking practices.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is correct about the Uniform Commercial Code?

Accepted Answer

A)  Article 3 covers negotiable instruments, while Article 4 covers bank deposits and collections. 
B)  Article 2 covers negotiable instruments as well as bank deposits and collections. 
C)  Article 4 and 4A are the only articles that affect the banking system. 
D)  It does not apply to the banking collection and deposit process because negotiable instruments are not considered "goods." 
E)  Article 1 is the only section that applies to banking collection and deposit processes. 
A)  Article 3 covers negotiable instruments, while Article 4 covers bank deposits and collections. 
B)  Article 2 covers negotiable instruments as well as bank deposits and collections. 
C)  Article 4 and 4A are the only articles that affect the banking system. 
D)  It does not apply to the banking collection and deposit process because negotiable instruments are not considered "goods." 
E)  Article 1 is the only section that applies to banking collection and deposit processes.

Question 10

When the amount of a check has been wrongfully altered to a higher amount than it was originally for,the drawer is generally liable only for the original amount of the check,assuming the drawer gives appropriate notice of the alteration to the bank.

Accepted Answer

A) True 
 B)False

Question 11

The deadline for a bank to dishonor an item received on a particular day is:

Accepted Answer

A)  midnight of the next banking day, except for "on us" items, for which the deadline is midnight of the same banking day. 
B)  midnight of the next banking day, except for "on us" items, for which the deadline is midnight of the second banking day. 
C)  midnight of the next banking day, except for "on us" items, for which the deadline is the open of business on the second banking day. 
D)  midnight of the next banking day, except for "on them" items, for which the deadline is midnight of the second banking day. 
E)  midnight of the third banking day, except for "on them" items, for which the deadline is midnight of the fourth banking day. 
A)  midnight of the next banking day, except for "on us" items, for which the deadline is midnight of the same banking day. 
B)  midnight of the next banking day, except for "on us" items, for which the deadline is midnight of the second banking day. 
C)  midnight of the next banking day, except for "on us" items, for which the deadline is the open of business on the second banking day. 
D)  midnight of the next banking day, except for "on them" items, for which the deadline is midnight of the second banking day. 
E)  midnight of the third banking day, except for "on them" items, for which the deadline is midnight of the fourth banking day.

Question 12

A banking day is any day that the particular bank is open to the public for carrying on substantially all banking functions.

Accepted Answer

A) True 
 B)False

Question 13

Article 4A of the Uniform Commercial Code establishes rules that regulate the creation and collection of and liability for wire transfers.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not a party to a check?

Accepted Answer

A)  the drawer 
B)  the drawee 
C)  the maker 
D)  the payee 
E)  the payer bank 
A)  the drawer 
B)  the drawee 
C)  the maker 
D)  the payee 
E)  the payer bank

Question 15

What options does a payee have who is holding a check payable to her?

Accepted Answer

A)  She must seek payment directly from the drawee bank. 
B)  She must seek payment on the check, either directly from the drawee bank or by depositing the check in her account at her own bank. 
C)  She may seek payment form the drawee bank, seek payment by depositing the check in her account at her own bank, or she may indorse the check to another person, so long as the indorsement has been approved by the drawer. 
D)  She may seek payment from the drawee bank, seek payment by depositing the check in her account at her own bank, or she may indorse the check to another person, so long as the indorsement has been approved by the drawee. 
E)  She may seek payment from the drawee bank, seek payment by depositing the check in her account at her own bank, or she may indorse the check to another person, and such indorsement does not need the approval of the drawer or drawee. 
A)  She must seek payment directly from the drawee bank. 
B)  She must seek payment on the check, either directly from the drawee bank or by depositing the check in her account at her own bank. 
C)  She may seek payment form the drawee bank, seek payment by depositing the check in her account at her own bank, or she may indorse the check to another person, so long as the indorsement has been approved by the drawer. 
D)  She may seek payment from the drawee bank, seek payment by depositing the check in her account at her own bank, or she may indorse the check to another person, so long as the indorsement has been approved by the drawee. 
E)  She may seek payment from the drawee bank, seek payment by depositing the check in her account at her own bank, or she may indorse the check to another person, and such indorsement does not need the approval of the drawer or drawee.

Question 16

A principal-agent relationship is formed between a customer and the bank if a deposit is a check that the bank must collect for the customer.

Accepted Answer

A) True 
 B)False

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

If a payer bank wrongfully dishonors a check,it is liable to the drawer for damages caused by criminal prosecution.

When a bank pays a check that has been materially altered to a higher amount,assuming the bank is given appropriate notice when the drawer discovers the alteration,the bank:

One major benefit of using a wire transfer is the speed of the transaction.

The only wire payment system is the Federal Reserve wire transfer network.

The Uniform Commercial Code places the risk of loss of an incomplete check on the payee.

A principal-agency relationship is created between a customer and a bank:

A written stop-payment order can be renewed in writing for additional ________ periods.

Which of the following is correct about the Uniform Commercial Code?

When the amount of a check has been wrongfully altered to a higher amount than it was originally for,the drawer is generally liable only for the original amount of the check,assuming the drawer gives appropriate notice of the alteration to the bank.

The deadline for a bank to dishonor an item received on a particular day is:

A banking day is any day that the particular bank is open to the public for carrying on substantially all banking functions.

Article 4A of the Uniform Commercial Code establishes rules that regulate the creation and collection of and liability for wire transfers.

Which of the following is not a party to a check?

What options does a payee have who is holding a check payable to her?

A principal-agent relationship is formed between a customer and the bank if a deposit is a check that the bank must collect for the customer.

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