Question 1

Which of the following instruments is a written order,usually directed to a bank,to pay money from a person's account to a third person?

Accepted Answer

A) Check 
B) Promissory note 
C) Certificate of deposit 
D) Draft 
A) Check 
B) Promissory note 
C) Certificate of deposit 
D) Draft

Question 2

Which of the following statements will cause an instrument to be nonnegotiable?

Accepted Answer

A) "Payment is subject to the terms of a mortgage dated August 30,2005." 
B) "Payment is secured by a mortgage dated August 30,2005." 
C) "Payment is in consideration of two months' rent." 
D) "Payment to be made 30 days after date,for a note dated August 30,2005." 
A) "Payment is subject to the terms of a mortgage dated August 30,2005." 
B) "Payment is secured by a mortgage dated August 30,2005." 
C) "Payment is in consideration of two months' rent." 
D) "Payment to be made 30 days after date,for a note dated August 30,2005."

Question 3

Which of the following statements is false about the writing requirement of negotiable instruments?

Accepted Answer

A) The in writing requirement is waived if the payable amount is under $100. 
B) An instrument is considered to be in writing if it is handwritten. 
C) An instrument is considered to be in writing if it is typed. 
D) An instrument is considered to be in writing if it is printed. 
A) The in writing requirement is waived if the payable amount is under $100. 
B) An instrument is considered to be in writing if it is handwritten. 
C) An instrument is considered to be in writing if it is typed. 
D) An instrument is considered to be in writing if it is printed.

Question 4

Which of the following is true if an instrument is undated?

Accepted Answer

A) Its date is the date it is signed by the maker or the drawer. 
B) Its date is the date it is issued by the maker or the drawer. 
C) Its date is the date it is received by the payee. 
D) The instrument is nonnegotiable if it is undated. 
A) Its date is the date it is signed by the maker or the drawer. 
B) Its date is the date it is issued by the maker or the drawer. 
C) Its date is the date it is received by the payee. 
D) The instrument is nonnegotiable if it is undated.

Question 5

Clint wrote a check to pay for his phone bill.The amount of the bill was $50.He wrote out the words "Fifty dollars only" but he also wrote "$60" in the area for numbers.As a result,the check:

Accepted Answer

A) is disqualified as a negotiable instrument. 
B) qualifies as a negotiable instrument,and the payee can collect $50. 
C) qualifies as a negotiable instrument,and the payee can collect $60. 
D) is disqualified as a negotiable instrument,unless Clint's intent is ascertained. 
A) is disqualified as a negotiable instrument. 
B) qualifies as a negotiable instrument,and the payee can collect $50. 
C) qualifies as a negotiable instrument,and the payee can collect $60. 
D) is disqualified as a negotiable instrument,unless Clint's intent is ascertained.

Question 6

A(n)________ can be negotiated or transferred by delivery of possession without indorsement.

Accepted Answer

A) order paper 
B) bearer paper 
C) cashier's check 
D) teller's check 
A) order paper 
B) bearer paper 
C) cashier's check 
D) teller's check

Question 7

A check is a draft that is payable on demand.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is a negotiable instrument?

Accepted Answer

A) "I owe you $100." 
B) "I promise to repay the loan of $3,000 only if I succeed in my business." 
C) "I promise to pay you the sum of $300 in the next week." 
D) "Please pay the bearer the amount of $500." 
A) "I owe you $100." 
B) "I promise to repay the loan of $3,000 only if I succeed in my business." 
C) "I promise to pay you the sum of $300 in the next week." 
D) "Please pay the bearer the amount of $500."

Question 9

A ________ is a two-party instrument in which one person makes an unconditional promise in writing to pay another person,a person specified by that person,or the bearer of the instrument,a fixed amount of money,with or without interest,either on demand or at a specified,future time.

Accepted Answer

A) promissory note 
B) certificate of deposit 
C) cashier's check 
D) teller's check 
A) promissory note 
B) certificate of deposit 
C) cashier's check 
D) teller's check

Question 10

Which of the following is nonnegotiable?

Accepted Answer

A) A check written "Pay James Watson." 
B) A note written "I promise to pay James Watson." 
C) A note written "I promise to pay James Watson or bearer." 
D) A draft payable "to the order of bearer." 
A) A check written "Pay James Watson." 
B) A note written "I promise to pay James Watson." 
C) A note written "I promise to pay James Watson or bearer." 
D) A draft payable "to the order of bearer."

Question 11

Which of the following is nonnegotiable?

Accepted Answer

A) A note that does not state any other undertaking by the person promising to do any act in addition to the payment of money 
B) A draft payable "15 days after sight" 
C) A note with a clause permitting the time for payment to be accelerated at the option of the maker 
D) A note that is payable "when the interest rate on 30-year treasury bonds reaches 10 percent" 
A) A note that does not state any other undertaking by the person promising to do any act in addition to the payment of money 
B) A draft payable "15 days after sight" 
C) A note with a clause permitting the time for payment to be accelerated at the option of the maker 
D) A note that is payable "when the interest rate on 30-year treasury bonds reaches 10 percent"

Question 12

Under the Revised Article 3 of the UCC,variable interest rate notes are not negotiable.

Accepted Answer

A) True 
 B)False

Question 13

The rate of interest courts impose on losing parties until they pay the winning parties is known as a(n):

Accepted Answer

A) variable rate. 
B) order rate. 
C) judgment rate. 
D) fixed rate. 
A) variable rate. 
B) order rate. 
C) judgment rate. 
D) fixed rate.

Question 14

If Viola owes Tina money,Tina may draw a document for the amount of the debt,naming Viola as drawer and herself or her bank as payee,and send the document to Viola's bank for payment.This document is a:

Accepted Answer

A) promissory note. 
B) certificate of deposit. 
C) draft. 
D) bond. 
A) promissory note. 
B) certificate of deposit. 
C) draft. 
D) bond.

Question 15

Which of the following is payable to the order of a specific person?

Accepted Answer

A) Order paper 
B) Bearer paper 
C) Cashier's check 
D) Teller's check 
A) Order paper 
B) Bearer paper 
C) Cashier's check 
D) Teller's check

Question 16

Checks and drafts are:

Accepted Answer

A) documents required as evidence for shipment of goods. 
B) documents that detail the transaction between a seller and a buyer. 
C) orders to another person to pay money to a third person. 
D) promises to pay another person money. 
A) documents required as evidence for shipment of goods. 
B) documents that detail the transaction between a seller and a buyer. 
C) orders to another person to pay money to a third person. 
D) promises to pay another person money.

Question 17

The Code determines negotiability at ________,so that indorsements do not affect the underlying negotiability of the instrument.

Accepted Answer

A) precompliance 
B) abeyance 
C) issuance 
D) disaffirmance 
A) precompliance 
B) abeyance 
C) issuance 
D) disaffirmance

Question 18

A ________ is an order to pay money rather than a promise to pay money.

Accepted Answer

A) promissory note 
B) certificate of deposit 
C) draft 
D) bond 
A) promissory note 
B) certificate of deposit 
C) draft 
D) bond

Question 19

Which of the following is the order of priority when there is a conflict in a negotiable instrument?

Accepted Answer

A) Typewritten terms prevail over printed terms,which prevail over handwritten terms. 
B) Printed terms prevail over typewritten terms,which prevail over handwritten terms. 
C) Handwritten terms prevail over printed terms,which prevail over typewritten terms. 
D) Handwritten terms prevail over typewritten terms,which prevail over printed terms. 
A) Typewritten terms prevail over printed terms,which prevail over handwritten terms. 
B) Printed terms prevail over typewritten terms,which prevail over handwritten terms. 
C) Handwritten terms prevail over printed terms,which prevail over typewritten terms. 
D) Handwritten terms prevail over typewritten terms,which prevail over printed terms.

Question 20

A ________ check is a draft on which the drawer and drawee are the same bank (or branches of the same bank).

Accepted Answer

A) cashier's 
B) teller's 
C) certified 
D) traveler's 
A) cashier's 
B) teller's 
C) certified 
D) traveler's

Exam 31: Negotiable Instruments

Which of the following instruments is a written order,usually directed to a bank,to pay money from a person's account to a third person?

Which of the following statements will cause an instrument to be nonnegotiable?

Which of the following statements is false about the writing requirement of negotiable instruments?

Which of the following is true if an instrument is undated?

Clint wrote a check to pay for his phone bill.The amount of the bill was $50.He wrote out the words "Fifty dollars only" but he also wrote "$60" in the area for numbers.As a result,the check:

A(n)________ can be negotiated or transferred by delivery of possession without indorsement.

A check is a draft that is payable on demand.

Which of the following is a negotiable instrument?

A ________ is a two-party instrument in which one person makes an unconditional promise in writing to pay another person,a person specified by that person,or the bearer of the instrument,a fixed amount of money,with or without interest,either on demand or at a specified,future time.

Which of the following is nonnegotiable?

Which of the following is nonnegotiable?

Under the Revised Article 3 of the UCC,variable interest rate notes are not negotiable.

The rate of interest courts impose on losing parties until they pay the winning parties is known as a(n):

If Viola owes Tina money,Tina may draw a document for the amount of the debt,naming Viola as drawer and herself or her bank as payee,and send the document to Viola's bank for payment.This document is a:

Which of the following is payable to the order of a specific person?

Checks and drafts are:

The Code determines negotiability at ________,so that indorsements do not affect the underlying negotiability of the instrument.

A ________ is an order to pay money rather than a promise to pay money.

Which of the following is the order of priority when there is a conflict in a negotiable instrument?

A ________ check is a draft on which the drawer and drawee are the same bank (or branches of the same bank).

The Nature of Law

The Resolution of Private Disputes

Business and the Constitution

Business Ethics, Corporate Social Responsibility, Corporate Governance, and Critical Thinking

Criminal Law and Procedure

Intentional Torts

Negligence and Strict Liability

Intellectual Property and Unfair Competition

Introduction to Contracts

The Agreement: Offer

The Agreement: Acceptance

Consideration

Reality of Consent

Capacity to Contract

Illegality

Writing

Rights of Third Parties

Performance and Remedies

Formation and Terms of Sales Contracts

Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance Law

Introduction to Credit and Secured Transactions

Security Interests in Personal Property

Bankruptcy

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Transfers

The Agency Relationship

Third-Party Relations of the Principal and the Agent

Introduction to Forms of Business and Formation of Partnerships

Operation of Partnerships and Related Forms

Partners Dissociation and Partnerships Dissolution and Winding up

Limited Liability Companies, limited Partnerships, and Limited Liability Limited Partnerships

History and Nature of Corporations

Organization and Financial Structure of Corporations

Management of Corporations

Shareholders Rights and Liabilities

Securities Regulation

Legal and Professional Responsibilities of Auditors, Consultants, and Securities Professionals

Administrative Law

The Federal Trade Commission Act and Consumer Protection Laws

Antitrust: the Sherman Act

The Clayton Act, the Robinsonpatman Act, and Antitrust Exemptions and Immunities

Employment Law

Environmental Regulation

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