Question 1

A certificate of deposit is:

Accepted Answer

A)  an instrument in which the maker makes an unconditional promise to pay a fixed amount of money with interest to the payee on demand. 
B)  the most widely used form of commercial paper that is a draft payable on demand and drawn on a bank. 
C)  an instrument in which the maker makes an unconditional promise to pay a fixed amount of money without interest to the payee at the specified future time. 
D)  an instrument containing an acknowledgment by a bank that it has received a deposit of money and a promise to repay the sum of money. 
A)  an instrument in which the maker makes an unconditional promise to pay a fixed amount of money with interest to the payee on demand. 
B)  the most widely used form of commercial paper that is a draft payable on demand and drawn on a bank. 
C)  an instrument in which the maker makes an unconditional promise to pay a fixed amount of money without interest to the payee at the specified future time. 
D)  an instrument containing an acknowledgment by a bank that it has received a deposit of money and a promise to repay the sum of money.

Question 2

A holder in due course takes the instrument free of all:

Accepted Answer

A)  defenses and claims to the instrument. 
B)  defenses and claims to the instrument except those which concern its validity. 
C)  defenses and claims to the instrument except those which concern its negotiability. 
D)  defenses and claims to the instrument including defenses of duress or infancy. 
A)  defenses and claims to the instrument. 
B)  defenses and claims to the instrument except those which concern its validity. 
C)  defenses and claims to the instrument except those which concern its negotiability. 
D)  defenses and claims to the instrument including defenses of duress or infancy.

Question 3

Which of the following instruments is negotiable?

Accepted Answer

A)  A note that states, "I promise to pay Vlad $800 if he repairs my car" 
B)  An instrument that provides, "Payment is subject to the terms of a contract dated November 20, 2009" 
C)  A note that contains the statement, "This note is secured by a mortgage dated July 01, 2009" 
D)  An instrument that reads, "I promise to pay to the order of Collin Corp. $550 sixty days after the delivery of my new refrigerator" 
A)  A note that states, "I promise to pay Vlad $800 if he repairs my car" 
B)  An instrument that provides, "Payment is subject to the terms of a contract dated November 20, 2009" 
C)  A note that contains the statement, "This note is secured by a mortgage dated July 01, 2009" 
D)  An instrument that reads, "I promise to pay to the order of Collin Corp. $550 sixty days after the delivery of my new refrigerator"

Question 4

Under revised Article 3 of the Uniform Commercial Code,an exception to the rule that an instrument payable on demand is not payable before the date of the instrument is made for:

Accepted Answer

A)  checks. 
B)  promissory notes. 
C)  a holder in due course. 
D)  certificates of deposits. 
A)  checks. 
B)  promissory notes. 
C)  a holder in due course. 
D)  certificates of deposits.

Question 5

When the terms of a check are ambiguous,handwritten terms prevail over printed terms.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is true of commercial paper?

Accepted Answer

A)  It cannot be used as a means of extending credit. 
B)  It is covered in Article 5 and Article 6 of the Uniform Commercial Code. 
C)  It can be accepted as a substitute for money. 
D)  It lacks the attribute of negotiability. 
A)  It cannot be used as a means of extending credit. 
B)  It is covered in Article 5 and Article 6 of the Uniform Commercial Code. 
C)  It can be accepted as a substitute for money. 
D)  It lacks the attribute of negotiability.

Question 7

An instrument that does not meet the formal requirements for negotiability will be treated as a simple contract rather than a negotiable instrument.

Accepted Answer

A) True 
 B)False

Question 8

An instrument can qualify as a negotiable instrument even if it includes a clause concerning giving,maintaining,or protecting collateral to secure payment.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is true of the articles of the Uniform Commercial Code?

Accepted Answer

A)  The law of commercial paper is covered in Article 3 and Article 4 of the Uniform Commercial Code. 
B)  Revised Article 3 of the Uniform Commercial Code developed in 1990 has now been adopted by all the states. 
C)  The law of commercial paper was originally adopted in Article 5 of the Uniform Commercial Code. 
D)  Negotiable documents, such as investment securities and documents of title, are not treated in the Uniform Commercial Code. 
A)  The law of commercial paper is covered in Article 3 and Article 4 of the Uniform Commercial Code. 
B)  Revised Article 3 of the Uniform Commercial Code developed in 1990 has now been adopted by all the states. 
C)  The law of commercial paper was originally adopted in Article 5 of the Uniform Commercial Code. 
D)  Negotiable documents, such as investment securities and documents of title, are not treated in the Uniform Commercial Code.

Question 10

Jamal borrowed money from Amir to buy school supplies.He drew up and signed the following promissory note,"IOU,Amir Shah,the sum of $30 for value received.Jamal Khan." Is the note a negotiable instrument?

Accepted Answer

No,this note is not a negotiable instrum

Question 11

Franklin Corp.sold money orders to drugstores.The money orders contained the words,"Payable to," followed by a blank.Can the money order qualify as a negotiable instrument?

Accepted Answer

Yes,the money order can qualify as a neg

Question 12

The negotiability of an instrument is affected by a statement of the transaction that gave rise to the instrument.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is true of the monetary aspect of a promise or order in a negotiable instrument?

Accepted Answer

A)  The promise or order in a negotiable instrument must be to pay a fixed amount of money. 
B)  The requirement of a "fixed amount" in a negotiable instrument applies only to interest and not principal. 
C)  The amount of any interest payable is not described in the instrument. 
D)  The amount of principal is calculated by reference to the formula or index referenced in the instrument if a variable rate of interest is prescribed. 
A)  The promise or order in a negotiable instrument must be to pay a fixed amount of money. 
B)  The requirement of a "fixed amount" in a negotiable instrument applies only to interest and not principal. 
C)  The amount of any interest payable is not described in the instrument. 
D)  The amount of principal is calculated by reference to the formula or index referenced in the instrument if a variable rate of interest is prescribed.

Question 14

Heidi borrowed $35,000 from Leopold Mortgage Corp.and signed a promissory note secured by a deed of trust on the land she owned.The note provided for interest at "30% over prime to be adjusted monthly." Is a note providing for a variable amount of interest,not ascertainable from the face of the note,a negotiable instrument?

Accepted Answer

Yes.Under Revised Article 3,the note wou

Question 15

For an instrument to be negotiable,a person must be able to take it free of many of the risks assumed by the assignee of a regular contract.

Accepted Answer

A) True 
 B)False

Question 16

Commercial paper is:

Accepted Answer

A)  the basic selling document of a 1933 Act registered offering. 
B)  a public offer by a bidder to purchase a target company's equity securities. 
C)  a way to either issue immediate payment or to extend credit. 
D)  any unit of goods that is treated by commercial usage as a single whole. 
A)  the basic selling document of a 1933 Act registered offering. 
B)  a public offer by a bidder to purchase a target company's equity securities. 
C)  a way to either issue immediate payment or to extend credit. 
D)  any unit of goods that is treated by commercial usage as a single whole.

Question 17

The Federal Trade Commission has adopted a regulation that:

Accepted Answer

A)  follows the traditional rights of a holder in due course in consumer purchase transactions. 
B)  alters the rights of a holder in due course in consumer purchase transactions. 
C)  prevents a consumer who gives a negotiable instrument to use the defense of fraudulent inducement. 
D)  denies all rights of a holder in due course in consumer purchase transactions. 
A)  follows the traditional rights of a holder in due course in consumer purchase transactions. 
B)  alters the rights of a holder in due course in consumer purchase transactions. 
C)  prevents a consumer who gives a negotiable instrument to use the defense of fraudulent inducement. 
D)  denies all rights of a holder in due course in consumer purchase transactions.

Question 18

An instrument can be made payable to two or more payees.

Accepted Answer

A) True 
 B)False

Question 19

If an instrument meets all of the formal requirements required for negotiability,_____.

Accepted Answer

A)  it is negotiable even though it is void or unenforceable for other reasons 
B)  it cannot be held by a person who had no notice of certain defenses against payment 
C)  its validity is automatically conferred 
D)  it is nonnegotiable if uncollectible 
A)  it is negotiable even though it is void or unenforceable for other reasons 
B)  it cannot be held by a person who had no notice of certain defenses against payment 
C)  its validity is automatically conferred 
D)  it is nonnegotiable if uncollectible

Question 20

A note in which the maker states,"I promise to pay to the order of Oliver $600 or a six-string guitar" is:

Accepted Answer

A)  not negotiable because it contains a conditional promise. 
B)  negotiable for payment of the guitar only. 
C)  negotiable for payment only if Oliver is the holder of the instrument. 
D)  not negotiable because it is not payable for money alone. 
A)  not negotiable because it contains a conditional promise. 
B)  negotiable for payment of the guitar only. 
C)  negotiable for payment only if Oliver is the holder of the instrument. 
D)  not negotiable because it is not payable for money alone.

Exam 38: Negotiable Instruments

A certificate of deposit is:

A holder in due course takes the instrument free of all:

Which of the following instruments is negotiable?

Under revised Article 3 of the Uniform Commercial Code,an exception to the rule that an instrument payable on demand is not payable before the date of the instrument is made for:

When the terms of a check are ambiguous,handwritten terms prevail over printed terms.

Which of the following statements is true of commercial paper?

An instrument that does not meet the formal requirements for negotiability will be treated as a simple contract rather than a negotiable instrument.

An instrument can qualify as a negotiable instrument even if it includes a clause concerning giving,maintaining,or protecting collateral to secure payment.

Which of the following is true of the articles of the Uniform Commercial Code?

Jamal borrowed money from Amir to buy school supplies.He drew up and signed the following promissory note,"IOU,Amir Shah,the sum of $30 for value received.Jamal Khan." Is the note a negotiable instrument?

Franklin Corp.sold money orders to drugstores.The money orders contained the words,"Payable to," followed by a blank.Can the money order qualify as a negotiable instrument?

The negotiability of an instrument is affected by a statement of the transaction that gave rise to the instrument.

Which of the following statements is true of the monetary aspect of a promise or order in a negotiable instrument?

For an instrument to be negotiable,a person must be able to take it free of many of the risks assumed by the assignee of a regular contract.

Commercial paper is:

The Federal Trade Commission has adopted a regulation that:

An instrument can be made payable to two or more payees.

If an instrument meets all of the formal requirements required for negotiability,_____.

A note in which the maker states,"I promise to pay to the order of Oliver $600 or a six-string guitar" is:

Law, Legal Reasoning, and the Legal Profession

Dispute Settlement

Business Ethics and Corporate Social Responsibility

Business and the Constitution

Crimes

Intentional Torts

Negligence and Strict Liability

Licensing and Intellectual Propertypart Two Contracts

The Nature and Origins of Contracts

Creating a Contract: Offers

Creating a Contract: Acceptances

Consideration

Capacity to Contract

Voluntary Consent

Illegality

The Form and Meaning of Contracts

Third Parties Contract Rights

Performance and Remediespart Three Sales

Formation and Terms of Sales Contracts

Warranties and Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contractspart Four Agency and Employment

The Agency Relationship-Creation, duties, and Termination

Liability of Principals and Agents to Third Parties

Employment Laws-Part Five Business Organizations

Which Form of Business Organization

Partnerships

Formation and Termination of Corporations

Management of the Corporate Business

Financing the Corporation and the Role of the Shareholders

Securities Regulation

Legal Liability of Accountantspart Six Property

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance-Part Seven Commercial Paper

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Fund Transfers-Part Eight Credit Transactions

Introduction to Security

Security Interests in Personal Property

Bankruptcy-Part Nine Government Regulation

The Antitrust Laws

Consumer Protection Laws

Environmental Regulation

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