Question 1

A personal check cannot be a negotiable instrument.

Accepted Answer

A) True 
 B)False

Question 2

To obtain office supplies for Doctors Medical Clinic, Emma executes a draft in favor of Floyd. A draft is

Accepted Answer

A)  ​a conditional promise to pay money. 
B)  ​an unconditional written order to pay money. 
C)  ​a qualified promise to set aside a sum of money. 
D)  ​a restricted promise to deliver goods at a future date. 
A)  ​a conditional promise to pay money. 
B)  ​an unconditional written order to pay money. 
C)  ​a qualified promise to set aside a sum of money. 
D)  ​a restricted promise to deliver goods at a future date.

Question 3

A symbol can serve as a valid signature.

Accepted Answer

A) True 
 B)False

Question 4

Jacob signs a promissory note payable to Kent "with interest" on which he conspicuously notes that it is "nonnegotiable." This instrument is

Accepted Answer

A)  ​negotiable. 
B)  ​nonnegotiable, because it includes the notation "nonnegotiable." 
C)  ​nonnegotiable, because it does not specify a rate of interest. 
D)  ​nonnegotiable, because the exact amount payable cannot be determined from the face of the instrument. 
A)  ​negotiable. 
B)  ​nonnegotiable, because it includes the notation "nonnegotiable." 
C)  ​nonnegotiable, because it does not specify a rate of interest. 
D)  ​nonnegotiable, because the exact amount payable cannot be determined from the face of the instrument.

Question 5

Rubber stamp signatures can be legally binding signatures.

Accepted Answer

A) True 
 B)False

Question 6

Fact Pattern 15-2
LNG Corporation and Mid-state Utility Company enter a contract for a sale of liquefied natural gas. LNG draws a draft unconditionally ordering Mid-state Utility to pay $50,000 to LNG's order in sixty days. Mid-state Utility signs and dates the draft.
-Refer to Fact Pattern 15-2.This instrument is

Accepted Answer

A)  ​a banker's acceptance. 
B)  ​a nonnegotiable instrument. 
C)  ​a promissory note. 
D)  ​a trade acceptance. 
A)  ​a banker's acceptance. 
B)  ​a nonnegotiable instrument. 
C)  ​a promissory note. 
D)  ​a trade acceptance.

Question 7

With respect to negotiability, the location of a signature on a document is important.

Accepted Answer

A) True 
 B)False

Question 8

For a certificate of deposit to be negotiable, it must be signed by the maker.

Accepted Answer

A) True 
 B)False

Question 9

Lucas signs an instrument payable to the order of MoneyNow, Inc., that allows a holder to demand payment of the entire amount due, with interest, if Lucas fails to make a payment. This instrument is

Accepted Answer

A)  ​negotiable. 
B)  ​nonnegotiable, because a holder can move up the payment date. 
C)  ​nonnegotiable, because moving up the payment date is conditional. 
D)  ​nonnegotiable, because the exact payment date cannot be determined from the face of the instrument. 
A)  ​negotiable. 
B)  ​nonnegotiable, because a holder can move up the payment date. 
C)  ​nonnegotiable, because moving up the payment date is conditional. 
D)  ​nonnegotiable, because the exact payment date cannot be determined from the face of the instrument.

Question 10

Eden signs a promissory note payable to the order of First Mortgage Company. The note states that it is payable "with interest at the legal rate." This note is​

Accepted Answer

A)  ​negotiable. 
B)  ​nonnegotiable, because it does not specify a rate of interest. 
C)  ​nonnegotiable, because it is payable with interest. 
D)  ​nonnegotiable, because the exact amount payable cannot be determined from the face of the instrument. 
A)  ​negotiable. 
B)  ​nonnegotiable, because it does not specify a rate of interest. 
C)  ​nonnegotiable, because it is payable with interest. 
D)  ​nonnegotiable, because the exact amount payable cannot be determined from the face of the instrument.

Question 11

Brie signs an instrument in which she promises to pay Carmen a certain price for her Dodge Dart. The instrument will be negotiable if it meets all of the requirements for negotiability, including that it is payable in

Accepted Answer

A)  ​goods equal in value to the market price of the car. 
B)  ​money. 
C)  ​any of the choices. 
D)  ​shares of stock equal in value to the market price of the car. 
A)  ​goods equal in value to the market price of the car. 
B)  ​money. 
C)  ​any of the choices. 
D)  ​shares of stock equal in value to the market price of the car.

Question 12

Builders Exchange, Inc., issues an instrument in favor of Custom Construction Company. For the instrument to be negotiable, it must

Accepted Answer

A)  ​be a conditional promise or order to pay. 
B)  ​be payable on demand or at a specific time. 
C)  ​be signed by the payee. 
D)  ​recite the consideration given in exchange for it. 
A)  ​be a conditional promise or order to pay. 
B)  ​be payable on demand or at a specific time. 
C)  ​be signed by the payee. 
D)  ​recite the consideration given in exchange for it.

Exam 15: Negotiable Instruments

A personal check cannot be a negotiable instrument.

To obtain office supplies for Doctors Medical Clinic, Emma executes a draft in favor of Floyd. A draft is

A symbol can serve as a valid signature.

Jacob signs a promissory note payable to Kent "with interest" on which he conspicuously notes that it is "nonnegotiable." This instrument is

Rubber stamp signatures can be legally binding signatures.

With respect to negotiability, the location of a signature on a document is important.

For a certificate of deposit to be negotiable, it must be signed by the maker.

Lucas signs an instrument payable to the order of MoneyNow, Inc., that allows a holder to demand payment of the entire amount due, with interest, if Lucas fails to make a payment. This instrument is

Eden signs a promissory note payable to the order of First Mortgage Company. The note states that it is payable "with interest at the legal rate." This note is​

Brie signs an instrument in which she promises to pay Carmen a certain price for her Dodge Dart. The instrument will be negotiable if it meets all of the requirements for negotiability, including that it is payable in

Builders Exchange, Inc., issues an instrument in favor of Custom Construction Company. For the instrument to be negotiable, it must

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Eden signs a promissory note payable to the order of First Mortgage Company. The note states that it is payable "with interest at the legal rate." This note is