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Exam 17: Negotiable Instruments: Negotiability and Transferability

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Question 1

Multiple Choice

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In order for an instrument to be negotiable,the promise or order to pay must be ________ and not ________.

A) general; expressed
B) specific; implied
C) general; implied
D) specific; expressed
E) equivocal; affirmative

F) C) and E)
G) A) and C)

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Question 2

Multiple Choice

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In the United States,of all the negotiable instruments regulated by the Uniform Commercial Code,which are the most common type used?

A) Money orders
B) Certificates of deposit
C) Notes
D) Demand instruments
E) Checks

F) B) and D)
G) D) and E)

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Question 3

Multiple Choice

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Which of the following is an incorrect statement regarding the requirements for an instrument to be negotiable?

If a negotiable instrument is payable to whomever possesses it,then it is a(n) ________ instrument.

Set forth the six requirements for an instrument to be negotiable.

What does the Truth-in-Savings Act require regarding information to be provided to customers before accounts are opened?

A written document containing the signature of the creator that makes an unconditional promise or order to pay a sum certain in money at either a time certain or on demand is called a ________.

Yard Mowing.Paula agreed to mow John's yard once a week for $50 per week throughout the summer.Paula,however,was having trouble getting her money from John.On one occasion,he gave her a handwritten IOU stating "I,John Jones,owe Paula Smith $50" which he signed at the end.A couple of weeks later,John did not have the money with which to pay Paula for additional mowing,and he handwrote the following on a piece of paper and gave it to her: "I,John Jones,promise to pay Paula Smith or to bearer,the sum of $100 on Monday,July 22,2017." Paula quit mowing John's yard,and disgusted with John,Paula assigned both documents to Vince.When Vince presented the documents to John,John refused to pay on the basis that after inspecting the yard,he decided that Paula was doing a poor job.Vince told him the documents constituted negotiable instruments,but John disagreed.Which of the following is true regarding whether the handwritten statement "I,John Jones,owe Paula Smith $50" coupled with the signature of John Jones is sufficient to constitute a negotiable instrument?

The Uniform Commercial Code requires a bank to certify a check if the customer has sufficient funds in his or her account.

Used Car Commission.William promised to sell Helen's car for her,but he wanted a commission of 10%.Helen signed an instrument promising to pay William a 10% commission if he sold her car.William assigned the agreement to Phil.Helen's car was sold and the buyer paid Helen.A dispute ensued between Helen and William regarding whether William found the buyer or the buyer found Helen.When Phil asked Helen for payment on the instrument,Helen refused.William,Helen,and Phil settled their dispute without going to court,and Helen wrote Phil a check for $3,000.Phil endorsed the check on the back,planning to take it to the bank the next day.Unfortunately,Phil lost the check and it was found by Barry,who cashed it at the local bank.Barry then left town.Before Phil endorsed the check,it was a(n) ________ instrument,and after he endorsed it,the check was a(n) ________ instrument.

A(n) ________ is a person receiving an endorsement.

Which of the following are examples of negotiable instruments?

With a demand instrument,payment can be made only at a specific time designated in the future.

A customer issues a stop-payment order when she has issued a check that has not yet been accepted and she wants the check to be accepted.

When a depositary bank receives a check,it must present the check at the payor bank and cannot send it through intermediary banks to reach the payor bank.

Instruments bearing joint payees require the endorsement of ________ before the instrument may be negotiated.

A promise made by a bank to pay a payee a certain amount of money at a future time is called a ________.

The Uniform Commercial Code requires an "instrument payable at a definite time" to have a time easily determined from the document itself.

In the check collection process,the depositary bank cannot also be the payor bank.

Which of the following governs consumer fund transactions?