Question 1

A person can purchase a(n)________ from a bank by paying the bank the amount of the check plus a fee for issuing the check.

Accepted Answer

A) indorsed check 
B) ordinary check 
C) blank check 
D) cashier's check 
A) indorsed check 
B) ordinary check 
C) blank check 
D) cashier's check

Question 2

What are altered checks? What are the actions that a bank can take when it encounters a case of check alteration?

Accepted Answer

Sometimes a check is altered before it i

Question 3

What recommendations did the Dodd-Frank Wall Street Reform and Consumer Protection Act make to reform lending regulation?

Accepted Answer

The financial crisis of 2008 was partial

Question 4

In which of the following cases is an overdraft created in a drawer's account?

Accepted Answer

A) when a properly payable check issued by the drawer is presented for payment, but the drawer's account does not have sufficient funds in it 
B) when the drawer issues a stop-payment order for a check, but the bank still goes ahead and pays the holder of the check 
C) when the bank pays the holder of a check in which the amount payable is altered to indicate a higher amount than was originally intended 
D) when the payee presents the check after six months from the date of the check and the bank still pays the holder 
A) when a properly payable check issued by the drawer is presented for payment, but the drawer's account does not have sufficient funds in it 
B) when the drawer issues a stop-payment order for a check, but the bank still goes ahead and pays the holder of the check 
C) when the bank pays the holder of a check in which the amount payable is altered to indicate a higher amount than was originally intended 
D) when the payee presents the check after six months from the date of the check and the bank still pays the holder

Question 5

Which of the following is one of the principal wire payment systems in use in the United States?

Accepted Answer

A) the Electronic Payments Network 
B) the Large Value Transfer System 
C) the Clearing House Interbank Payments System (CHIPS) 
D) the New York Currency Exchange 
A) the Electronic Payments Network 
B) the Large Value Transfer System 
C) the Clearing House Interbank Payments System (CHIPS) 
D) the New York Currency Exchange

Question 6

Which of the following is one of the provisions of Article 4 of the Uniform Commercial Code?

Accepted Answer

A) establishing the requirements for negotiable instruments, such as checks 
B) establishing the rules and principles that regulate bank deposit procedures for checking accounts offered by commercial banks 
C) stipulating the rules that regulate the creation and collection of and liability for wire transfers 
D) reviewing and revising guidelines for ownership of securities by investors 
A) establishing the requirements for negotiable instruments, such as checks 
B) establishing the rules and principles that regulate bank deposit procedures for checking accounts offered by commercial banks 
C) stipulating the rules that regulate the creation and collection of and liability for wire transfers 
D) reviewing and revising guidelines for ownership of securities by investors

Question 7

If a payer bank pays the altered amount on an altered check, it can recover the altered amount minus the original tenor from the party who presented the altered check for payment.

Accepted Answer

A) True 
 B)False

Question 8

When a customer deposits a check into a checking account for collection, the depository bank does not have to pay the customer the amount of the check until the check "clears."

Accepted Answer

A) True 
 B)False

Question 9

Instead of depositing an "on them" check for collection, a depositor can physically submit the check for payment at the payer bank.This is called ________.

Accepted Answer

A) provisional credit 
B) indorsement of the check 
C) presentment across the counter 
D) final settlement 
A) provisional credit 
B) indorsement of the check 
C) presentment across the counter 
D) final settlement

Question 10

Describe how a check can be indorsed.

Accepted Answer

The payee is the holder of a check.As su

Question 11

In which of the following cases is a bank considered liable for unauthorized payments?

Accepted Answer

A) The bank does not attach canceled checks to the monthly statements of account. 
B) The bank does not provide images of paid checks online. 
C) The bank destroys original copies of canceled checks not sent to customers after seven years from the date of the check. 
D) The bank does not provide sufficient information on checks paid to customers in their monthly account statements. 
A) The bank does not attach canceled checks to the monthly statements of account. 
B) The bank does not provide images of paid checks online. 
C) The bank destroys original copies of canceled checks not sent to customers after seven years from the date of the check. 
D) The bank does not provide sufficient information on checks paid to customers in their monthly account statements.

Question 12

Certified checks become stale after two years from the date of their issue.

Accepted Answer

A) True 
 B)False

Question 13

The Pittsburgh Peelers are a professional soccer team playing in Major League Soccer.They recently approached Darth Water, a leading sports-drink manufacturer, to sponsor their team for the upcoming season.Darth Water agrees to sponsor the team for an amount of $1 million, to be paid in installments over the course of the season.Darth Water instructs its bank, Orange County Bank, to wire the funds to Pittsburgh Peelers' bank, the Jersey Shore Bank, with instructions to credit Pittsburgh Peelers' account.Which of the following parties is the originator of the wire transfer in the above case?

Accepted Answer

A) Pittsburgh Peelers 
B) Jersey Shore Bank 
C) Darth Water 
D) Orange County Bank 
A) Pittsburgh Peelers 
B) Jersey Shore Bank 
C) Darth Water 
D) Orange County Bank

Question 14

Except for the collecting bank, each bank in the collection process, including the payer bank, must take proper action on an "on them" check prior to its midnight deadline.

Accepted Answer

A) True 
 B)False

Question 15

A creditor-debtor relationship between a customer and a bank is created if the customer writes a check against his or her account.

Accepted Answer

A) True 
 B)False

Question 16

Banks are obligated under the provisions of Article 4 of the UCC to send canceled checks along with the monthly statements of account to their checking account customers.

Accepted Answer

A) True 
 B)False

Question 17

Article 4A of the Uniform Commercial Code governs commercial and consumer wire transfers.

Accepted Answer

A) True 
 B)False

Question 18

An oral order to stop payment on a check is binding on the payer bank for a period of 14 calendar days.

Accepted Answer

A) True 
 B)False

Question 19

A check that has been outstanding for more than ________ is considered stale.

Accepted Answer

A) six months 
B) one year 
C) three months 
D) nine months 
A) six months 
B) one year 
C) three months 
D) nine months

Question 20

A check is finally paid when ________.

Accepted Answer

A) the depository bank credits the customer's account with an option to reverse the credit in case of dishonoring of the check 
B) the payer bank fails to dishonor the check within certain statutory time periods 
C) the drawer settles for the check while holding a right to revoke the settlement 
D) the final bank in the collection process tentatively credits the account of the prior transferor 
A) the depository bank credits the customer's account with an option to reverse the credit in case of dishonoring of the check 
B) the payer bank fails to dishonor the check within certain statutory time periods 
C) the drawer settles for the check while holding a right to revoke the settlement 
D) the final bank in the collection process tentatively credits the account of the prior transferor

Exam 25: Banks, E-Money, and Financial Reform

A person can purchase a(n)________ from a bank by paying the bank the amount of the check plus a fee for issuing the check.

What are altered checks? What are the actions that a bank can take when it encounters a case of check alteration?

What recommendations did the Dodd-Frank Wall Street Reform and Consumer Protection Act make to reform lending regulation?

In which of the following cases is an overdraft created in a drawer's account?

Which of the following is one of the principal wire payment systems in use in the United States?

Which of the following is one of the provisions of Article 4 of the Uniform Commercial Code?

If a payer bank pays the altered amount on an altered check, it can recover the altered amount minus the original tenor from the party who presented the altered check for payment.

When a customer deposits a check into a checking account for collection, the depository bank does not have to pay the customer the amount of the check until the check "clears."

Instead of depositing an "on them" check for collection, a depositor can physically submit the check for payment at the payer bank.This is called ________.

Describe how a check can be indorsed.

In which of the following cases is a bank considered liable for unauthorized payments?

Certified checks become stale after two years from the date of their issue.

Except for the collecting bank, each bank in the collection process, including the payer bank, must take proper action on an "on them" check prior to its midnight deadline.

A creditor-debtor relationship between a customer and a bank is created if the customer writes a check against his or her account.

Banks are obligated under the provisions of Article 4 of the UCC to send canceled checks along with the monthly statements of account to their checking account customers.

Article 4A of the Uniform Commercial Code governs commercial and consumer wire transfers.

An oral order to stop payment on a check is binding on the payer bank for a period of 14 calendar days.

A check that has been outstanding for more than ________ is considered stale.

A check is finally paid when ________.

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