Question 1

Negotiating order instruments requires indorsement.

Accepted Answer

A) True 
 B)False

Question 2

To avoid the risk of loss from theft, a holder may convert a blank indorsement to a special indorsement.

Accepted Answer

A) True 
 B)False

Question 3

To pay for investment advice from Buffet & Carraldo P.A., Doris signs a check payable to "Buffet or Carraldo." A proper indorsement of the check is​

Accepted Answer

A)  ​not possible. 
B)  ​"Buffet" and "Carraldo" only. 
C)  ​"Buffet" only, or "Carraldo" only, but not "Buffet" and "Carraldo." 
D)  ​"Buffet" only, or "Carraldo" only, or "Buffet" and "Carraldo." 
A)  ​not possible. 
B)  ​"Buffet" and "Carraldo" only. 
C)  ​"Buffet" only, or "Carraldo" only, but not "Buffet" and "Carraldo." 
D)  ​"Buffet" only, or "Carraldo" only, or "Buffet" and "Carraldo."

Question 4

A person who in good faith acquires a negotiable instrument from a thief cannot become an HDC under any circumstances.

Accepted Answer

A) True 
 B)False

Question 5

Emily writes and signs a check payable to "Five Star Cinema." George, Five Star's manager, indorses the check "For deposit only." This is​

Accepted Answer

A)  ​a blank indorsement. 
B)  ​a qualified indorsement. 
C)  ​a restrictive indorsement. 
D)  ​a special indorsement. 
A)  ​a blank indorsement. 
B)  ​a qualified indorsement. 
C)  ​a restrictive indorsement. 
D)  ​a special indorsement.

Question 6

Lindsey, an accountant for Madison & Monroe, acquires a negotiable instrument from Norma by promising to pay its face value in thirty days. Lindsey acquires the status of an HDC when she​

Accepted Answer

A)  ​acquires possession of the negotiable instrument. 
B)  ​promises to pay the face value due on the instrument. 
C)  ​pays the face value due on the instrument. 
D)  ​transfers the instrument to another party. 
A)  ​acquires possession of the negotiable instrument. 
B)  ​promises to pay the face value due on the instrument. 
C)  ​pays the face value due on the instrument. 
D)  ​transfers the instrument to another party.

Question 7

A holder does not take an instrument for value if he or she gives a negotiable instrument as payment.

Accepted Answer

A) True 
 B)False

Question 8

Negotiating order instruments requires neither delivery nor indorsement.

Accepted Answer

A) True 
 B)False

Question 9

Plumbing & Pipes Supply Company issues a promissory note as a demand instrument with a due date of October 5. QuikPay Loan Company accepts the note. QuikPay has notice that the note is overdue if the firm takes the note​

Accepted Answer

A)  ​after October 5. 
B)  ​before October 5. 
C)  ​on October 5. 
D)  ​at any time. 
A)  ​after October 5. 
B)  ​before October 5. 
C)  ​on October 5. 
D)  ​at any time.

Question 10

The effect of a conditional indorsement on the back of an instrument differs from the effect of conditional language that appears on its face.

Accepted Answer

A) True 
 B)False

Question 11

Calvert buys a promissory note from Darin. The note is due on December 5. December 5 is a Sunday. The note is​

Accepted Answer

A)  ​payable anytime the week of December 6. 
B)  ​payable December 6. 
C)  ​payable on December 5 only. 
D)  ​considered defective. 
A)  ​payable anytime the week of December 6. 
B)  ​payable December 6. 
C)  ​payable on December 5 only. 
D)  ​considered defective.

Question 12

Jess receives a check from Kelly. Without Jess's knowledge, Leo indorses it in his own name and deposits it in his account at Metro Bank. In Jess's subsequent suit against the bank for the money, the court will most likely rule in favor of​

Accepted Answer

A)  ​Jess, because Leo's signature is not authorized. 
B)  ​Jess, because Metro Bank is not a holder in due course. 
C)  ​Metro Bank, because Leo's signature is not authorized. 
D)  ​Metro Bank, because it is a holder in due course. 
A)  ​Jess, because Leo's signature is not authorized. 
B)  ​Jess, because Metro Bank is not a holder in due course. 
C)  ​Metro Bank, because Leo's signature is not authorized. 
D)  ​Metro Bank, because it is a holder in due course.

Exam 26: Transferability and Holder in Due Course

Negotiating order instruments requires indorsement.

To avoid the risk of loss from theft, a holder may convert a blank indorsement to a special indorsement.

To pay for investment advice from Buffet & Carraldo P.A., Doris signs a check payable to "Buffet or Carraldo." A proper indorsement of the check is​

A person who in good faith acquires a negotiable instrument from a thief cannot become an HDC under any circumstances.

Emily writes and signs a check payable to "Five Star Cinema." George, Five Star's manager, indorses the check "For deposit only." This is​

Lindsey, an accountant for Madison & Monroe, acquires a negotiable instrument from Norma by promising to pay its face value in thirty days. Lindsey acquires the status of an HDC when she​

A holder does not take an instrument for value if he or she gives a negotiable instrument as payment.

Negotiating order instruments requires neither delivery nor indorsement.

Plumbing & Pipes Supply Company issues a promissory note as a demand instrument with a due date of October 5. QuikPay Loan Company accepts the note. QuikPay has notice that the note is overdue if the firm takes the note​

The effect of a conditional indorsement on the back of an instrument differs from the effect of conditional language that appears on its face.

Calvert buys a promissory note from Darin. The note is due on December 5. December 5 is a Sunday. The note is​

Jess receives a check from Kelly. Without Jess's knowledge, Leo indorses it in his own name and deposits it in his account at Metro Bank. In Jess's subsequent suit against the bank for the money, the court will most likely rule in favor of​

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To pay for investment advice from Buffet & Carraldo P.A., Doris signs a check payable to "Buffet or Carraldo." A proper indorsement of the check is

Emily writes and signs a check payable to "Five Star Cinema." George, Five Star's manager, indorses the check "For deposit only." This is

Lindsey, an accountant for Madison & Monroe, acquires a negotiable instrument from Norma by promising to pay its face value in thirty days. Lindsey acquires the status of an HDC when she

Plumbing & Pipes Supply Company issues a promissory note as a demand instrument with a due date of October 5. QuikPay Loan Company accepts the note. QuikPay has notice that the note is overdue if the firm takes the note

Calvert buys a promissory note from Darin. The note is due on December 5. December 5 is a Sunday. The note is

Jess receives a check from Kelly. Without Jess's knowledge, Leo indorses it in his own name and deposits it in his account at Metro Bank. In Jess's subsequent suit against the bank for the money, the court will most likely rule in favor of