Question 1

To obtain a business license, Bess writes a check to a certain state agency. Bess is

Accepted Answer

A)  the drawee. 
B)  the drawer. 
C)  the indorser. 
D)  the payee. 
A)  the drawee. 
B)  the drawer. 
C)  the indorser. 
D)  the payee.

Question 2

Cricket signs a check payable to the order of Discount Warehouse, Inc., that does not include a date. This check is

Accepted Answer

A)  negotiable. 
B)  nonnegotiable, because it does not include a date. 
C)  nonnegotiable, because it is payable to a corporation. 
D)  nonnegotiable, because it is signed by the drawer. 
A)  negotiable. 
B)  nonnegotiable, because it does not include a date. 
C)  nonnegotiable, because it is payable to a corporation. 
D)  nonnegotiable, because it is signed by the drawer.

Question 3

On a certificate of deposit, the bank is the maker and the depositor is the payee.

Accepted Answer

A) True 
 B)False

Question 4

A sight draft may be payable on acceptance.

Accepted Answer

A) True 
 B)False

Question 5

A holder is any person in possession of a negotiable instrument that is payable either to the bearer or to an identified person who is the person in possession.

Accepted Answer

A) True 
 B)False

Question 6

Payday Loans, Inc., signs an instrument payable to the order of Qiana that states, "The maker of this note at the date of maturity, April 1, 2016, can extend the time of pay?ment, but for no more than a rea?sonable time." This instrument is

Accepted Answer

A)  negotiable. 
B)  nonnegotiable, because it includes an extension clause. 
C)  nonnegotiable, because it is not payable within a definite time. 
D)  nonnegotiable, because it is payable to a specific payee. 
A)  negotiable. 
B)  nonnegotiable, because it includes an extension clause. 
C)  nonnegotiable, because it is not payable within a definite time. 
D)  nonnegotiable, because it is payable to a specific payee.

Question 7

All checks are time instruments.

Accepted Answer

A) True 
 B)False

Question 8

Brie wants one of Cari's purebred Dalmations. Brie signs an instrument in which she promises to pay Jasmine for a puppy. The instrument will be negotiable if it is payable in

Accepted Answer

A)  goods of equal market value. 
B)  money. 
C)  any of the choices. 
D)  shares of stock. 
A)  goods of equal market value. 
B)  money. 
C)  any of the choices. 
D)  shares of stock.

Question 9

A signature on a negotiable instrument cannot be made by a device, such as a rubber stamp or a thumbprint.

Accepted Answer

A) True 
 B)False

Question 10

An instrument that promises to pay "in goods" can be negotiable.

Accepted Answer

A) True 
 B)False

Question 11

Bart, the owner of Clear Cut Corporation, signs an instrument that includes the phrase "payment for this note will be made from the pro?ceeds of next year's timber sale." This instrument is

Accepted Answer

A)  negotiable. 
B)  nonnegotiable, because payment can be made only out of a particular source. 
C)  nonnegotiable, because it states an express condition to payment. 
D)  nonnegotiable, because the reasons for the note are not clear on its face. 
A)  negotiable. 
B)  nonnegotiable, because payment can be made only out of a particular source. 
C)  nonnegotiable, because it states an express condition to payment. 
D)  nonnegotiable, because the reasons for the note are not clear on its face.

Question 12

To be negotiable, an instrument cannot be portable.

Accepted Answer

A) True 
 B)False

Question 13

Grace signs an instrument payable to the order of Hillside Credit Union "on or before" June 15. This instrument is

Accepted Answer

A)  negotiable. 
B)  nonnegotiable, because the maker can move up the payment date. 
C)  nonnegotiable, because moving up the payment date is optional. 
D)  nonnegotiable, because the exact payment date cannot be deter?mined from the face of the instrument. 
A)  negotiable. 
B)  nonnegotiable, because the maker can move up the payment date. 
C)  nonnegotiable, because moving up the payment date is optional. 
D)  nonnegotiable, because the exact payment date cannot be deter?mined from the face of the instrument.

Question 14

Ralph gets his paycheck from Shakes n' Burgers Restaurant, his em?ployer, and attempts to deposit it in his account at Town Bank. Uri, the bank's teller, notices that on the check the amount stated in words is different from the amount stated in numerals. Which amount can the bank lawfully credit to Ralph's account?

Accepted Answer

An amount stated in words on a check pre

Question 15

To be negotiable, an instrument must be payable on demand.

Accepted Answer

A) True 
 B)False

Question 16

On a cashier's check, the drawer is also always the payee.

Accepted Answer

A) True 
 B)False

Question 17

A instrument "payable to the order of bearer" is neither an order instrument nor a bearer instrument.

Accepted Answer

A) True 
 B)False

Question 18

A symbol can serve as a valid signature.

Accepted Answer

A) True 
 B)False

Question 19

An instrument is nonnegotiable unless the word "negotiable" is printed on it.

Accepted Answer

A) True 
 B)False

Question 20

The checks that you wrote are negotiable instruments that act as substitutes for cash.

Accepted Answer

A) True 
 B)False

Exam 25: The Function Creation of Negotiable Instruments

To obtain a business license, Bess writes a check to a certain state agency. Bess is

Cricket signs a check payable to the order of Discount Warehouse, Inc., that does not include a date. This check is

On a certificate of deposit, the bank is the maker and the depositor is the payee.

A sight draft may be payable on acceptance.

A holder is any person in possession of a negotiable instrument that is payable either to the bearer or to an identified person who is the person in possession.

Payday Loans, Inc., signs an instrument payable to the order of Qiana that states, "The maker of this note at the date of maturity, April 1, 2016, can extend the time of pay?ment, but for no more than a rea?sonable time." This instrument is

All checks are time instruments.

Brie wants one of Cari's purebred Dalmations. Brie signs an instrument in which she promises to pay Jasmine for a puppy. The instrument will be negotiable if it is payable in

A signature on a negotiable instrument cannot be made by a device, such as a rubber stamp or a thumbprint.

An instrument that promises to pay "in goods" can be negotiable.

Bart, the owner of Clear Cut Corporation, signs an instrument that includes the phrase "payment for this note will be made from the pro?ceeds of next year's timber sale." This instrument is

To be negotiable, an instrument cannot be portable.

Grace signs an instrument payable to the order of Hillside Credit Union "on or before" June 15. This instrument is

To be negotiable, an instrument must be payable on demand.

On a cashier's check, the drawer is also always the payee.

A instrument "payable to the order of bearer" is neither an order instrument nor a bearer instrument.

A symbol can serve as a valid signature.

An instrument is nonnegotiable unless the word "negotiable" is printed on it.

The checks that you wrote are negotiable instruments that act as substitutes for cash.

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