57. To be found a holder in due course, a transferee must:
a. be in possession of an instrument in the form of either a draft or a check (but not a note) made out “to bearer
”
b. have agreed in writing not to be bound as a contractual assignee
c. simply be in possession of a negotiable instrument
d. provided a signed unconditional writing, promising (or ordering to pay), at a specified time in the future and
made out “to order” or “to bearer ”
e. none of the other choices
58. Negotiable instruments do not include:
a. notes
b. certificates of deposit
c. checks
d. promissory notes
e. all of the other choices are negotiable instruments
59. Negotiable instruments under the UCC do not include:
a. notes
b. certificates of deposit
c. cash
d. promissory notes
e. all of the other choices are negotiable instruments subject to UCC
60. The one who agreed to make a payment, such as a bank making a payment based on a document presented to it is:
a. the payee
b. the beneficiary
c. the drawer
d. the drawee
e. none of the other choices
61. The one who agreed to make a payment, such as a bank making a payment based on a document presented to it is:
a. the payee
b. the beneficiary
c. the drawer
d. the checker
e. none of the other choices
62. The one who issues or creates the document that requests payment, probably from a bank, is called:
a. the payee
b. the beneficiary
c. the drawer
d. the drawee
e. none of the other choices
63. The one who issues or creates the document that requests payment, probably from a bank, is called:
a. the payee
b. the beneficiary
c. the checker
d. the drawee
e. none of the other choices
64. The one who receives payment from a negotiable instrument is called:
a. the payee
b. the checker
c. the drawer
d. the drawee
e. none of the other choices
65. The one who receives payment from a negotiable instrument is called:
a. the negotiator
b. the checker
c. the drawer
d. the drawee
e. none of the other choices
66. The issues or creates the document that requests payment, probably from a bank, but it could be from
another party.
a. drawee
b. drawer
c. checker
d. payee
e. payer
67. The issues or creates the document that requests payment, probably from a bank, but it could be from
another party.
a. drawee
b. payer
c. checker
d. payee
e. none of the other choices are correct
68. The agrees to make the payment, such as the bank making a payment based on a document presented to it.
a. drawee
b. drawer
c. payee
d. checker
e. beneficiary
69. The agrees to make the payment, such as the bank making a payment based on a document presented to it.
a. beneficiary
b. drawer
c. payee
d. checker
e. none of the other choices are correct
70. With negotiable instruments, the party to receive payment is the:
a. payee
b. drawer
c. payer
d. drawee
e. secondary party
71. With negotiable instruments, the party to receive payment is the:
a. beneficiary
b. drawer
c. payer
d. drawee
e. secondary party
72. With negotiable instruments, the party to receive payment is the:
a. secondary party
b. drawer
c. payer
d. drawee
e. none of the other choices are correct
73. Under Article 3 of the UCC, a check is:
a. an unconditional written order to pay that involves three parties: a drawer, drawee, payee; the drawee may
be a bank, person, or business. Payment may be set at some future time
b. a draft drawn on a bank and payable on demand
c. a promise by one party to pay a certain sum of money to another party; two parties are involved: the maker
and the payee; payment may be set at some future date
d. an acknowledgment by a bank that it has received money from a customer with a promise from the bank
that it will repay the money received either at a specified date or upon demand; two parties are involved: a
maker and a payee
e. none of these
74. Under Article 3 of the UCC, a check is:
a. an unconditional written order to pay that involves three parties: a drawer, drawee, payee; the drawee may
be a bank, person, or business. Payment may be set at some future time
b. an unconditional written order to pay that involves two parties: drawer and payee; the payment is at an
agreed upon future date
c. a promise by one party to pay a certain sum of money to another party; two parties are involved: the maker
and the payee; payment may be set at some future date
d. an acknowledgment by a bank that it has received money from a customer with a promise from the bank
that it will repay the money received either at a specified date or upon demand; two parties are involved: a
maker and a payee
e. none of these
75. A “draft drawn on a bank and payable on demand” is a:
a. check
b. note
c. certificate of deposit
d. deposit slip
e. promissory note
76. A “draft drawn on a bank and payable on demand” is a:
a. promissory note
b. note
c. certificate of deposit
d. deposit slip
e. none of the other choices are correct
77. The most commonly used form of draft is a:
a. check
b. note
c. certificate of deposit
d. deposit slip
e. promissory note
78. The most commonly used form of draft is a:
a. promissory note
b. note
c. certificate of deposit
d. deposit slip
e. none of the other choices are correct
79. A check must be paid:
a. on demand
b. at a later date
c. no later than 3 months after it is issued
d. within the year it is issued
e. none of the other choices are correct
80. A check must have as its drawee.
a. a court
b. an individual
c. a corporation
d. a bank
e. none of the other choices are correct
81. A check must have as its drawee.
a. a court
b. an individual
c. a corporation
d. an international backer
e. none of the other choices are correct
82. A form of check in which the bank is both the drawer and the drawee is called a:
a. real check
b. bank check
c. cashier’s check
d. credit check
e. cashier’s note
83. A form of check in which the bank is both the drawer and the drawee is called a:
a. real check
b. bank check
c. cashier’s note
d. credit check
e. none of the other choices are correct
84. A is a form of check in which the bank is both the drawer and the drawee.
a. real check
b. bank check
c. cashier’s check
d. credit check
e. cashier’s note
85. A is a form of check in which the bank is both the drawer and the drawee.
a. real check
b. bank check
c. cashier’s note
d. credit check
e. none of the other choices are correct
86. Cashier’s checks are frequently used in transactions where:
a. the buyer is trustworthy
b. the seller demands guaranteed payment
c. the seller is overpaying for the goods
d. the seller and buyer know each other well
e. the buyer does not have enough money to buy the goods
87. Julia is buying a house from Mary. Mary wants to ensure that the bank will honor the check Julia uses to buy the
house so she will probably insist that Julia pay with a:
a. real check
b. cashier’s check
c. personal check
d. deposit slip
e. cashier’s note
88. In Associated Home and RV Sales v. Bank of Belen, a bookkeeper for Associated forged many checks on the
account at the Bank of Belen. Associated sued the bank for negligence to recover the stolen funds. The appeals
court held:
a. the bank was strictly liable under the UCC for making payments on forged checks
b. the bank could be liable under the UCC for negligence ; that would be determined at trialr
c. the bank was not liable because, under the UCC, if the signature is authorized on a check, the bank has
not violated its duty of care
d. the bank was not liable because Associated carelessly allowed others to get copies of its blank checks
e. none of the other choices
89. In Associated Home and RV Sales v. Bank of Belen, a bookkeeper for Associated forged many checks on the
account at the Bank of Belen. Associated sued the bank for negligence to recover the stolen funds. The appeals
court held:
a. the bank was liable under the UCC for negligence for not comparing the signatures
b. the bank was liable under the UCC for negligence for allowing a stamped signature to be used without a
personal countersignature
c. the bank was not liable because, under the UCC, if the signature looks like a valid stamped signature, the
bank has not violated its duty of care
d. the bank was not liable because Associated carelessly allowed others to get copies of its blank checks
e. none of the other choices
90. Under Article 3 of the UCC, a note is:
a. an unconditional written order to pay that involves three parties: drawer, drawee, payee; the drawee may be
a bank, person, or business; payment may be set at some future time
b. an unconditional written order to pay that involves three parties: drawer, drawee, and payee; the drawee
must be a bank; payment must be “on demand”
c. a promise by one party to pay a certain sum of money to another party; two parties are involved: the maker
and the payee; payment may be set at a date in the future
d. an acknowledgment by a bank that it has received money from a customer with a promise from the bank
that it will repay the money received either at a specified date or upon demand; two parties are involved: a
maker and a payee
e. none of the other choices
91. Under Article 3 of the UCC, a note is:
a. an unconditional written order to pay that involves three parties: drawer, drawee, payee; the drawee may be
a bank, person, or business; payment may be set at some future time
b. an unconditional written order to pay that involves three parties: drawer, drawee, and payee; the drawee
must be a bank; payment must be “on demand”
c. an acknowledgment by a bank that it has received money from a customer with a promise from the bank
that it will repay the money received either at a specified date or upon demand; two parties are involved: a
maker and a payee
d. an acknowledgment by a bank that it has received money from a maker ordering the bank to pay the money
received either upon demand to the payee
e. none of the other choices
92. A commercial instrument where one party has a legal obligation to pay another party a certain sum of money and
involves a maker and a payee only is called:
a. a check
b. a note
c. a debit
d. a draft
e. a certificate of deposit
93. A commercial instrument where one party has a legal obligation to pay another party a certain sum of money and
involves a maker and a payee only is called:
a. a check
b. a certificate of deposit
c. a debit
d. a draft
e. none of the other choices
94. A promise to pay a certain sum of money to another party is a type of commercial paper called a(n):
a. note
b. check
c. obligation
d. promise
e. draft
95. The of a note is the party who promises to pay another party.
a. marketer
b. maker
c. financer
d. payer
e. payee
96. The of a note is the party who promises to pay another party.
a. marketer
b. payee
c. financer
d. payer
e. none of the other choices are correct
97. Promissory notes are instruments that involve parties.
a. three
b. four
c. more than three
d. two
e. five
98. Promissory notes are instruments that involve parties.
a. three
b. four
c. more than three
d. five
e. none of the other choices are correct
99. When personal property is used as collateral to back up a loan, the note created is a:
a. balloon note
b. fixed note
c. collateral note
d. property note
e. personal note
100. When personal property is used as collateral to back up a loan, the note created is a:
a. balloon note
b. fixed note
c. personal note
d. property note
e. none of the other choices are correct
101. When real estate is used as collateral to secure the loan, the note is a:
a. balloon note
b. fixed note
c. property note
d. real estate mortgage note
e. landed note
102. When real estate is used as collateral to secure the loan, the note is a:
a. balloon note
b. fixed note
c. property note
d. landed note
e. none of the other choices are correct
103. When the maker promises to repay the note in specified installments, the note is a(n):
a. fixed payment note
b. property note
c. installment note
d. real estate property note
e. collateral note
104. When the maker promises to repay the note in specified installments, the note is a:
a. fixed payment note
b. property note
c. collateral note
d. real estate property note
e. none of the other choices are correct
105. When a note is to be paid in regular payments but also includes a final payment more than double the regular
payments, the note is called:
a. an installment note
b. a collateral note
c. a payee note
d. a maker note
e. a balloon note
106. When a note is to be paid in regular payments but also includes a final payment more than double the regular
payments, the note is called:
a. an installment note
b. a collateral note
c. a payee note
d. a maker note
e. none of the other choices
107. Under Article 3 of the UCC, a draft is:
a. an unconditional written order to pay that involves three parties: drawer, drawee, payee; the drawee may be
a bank, person, or business; payment may be set at a future time
b. an unconditional written order to pay that involves three distinct parties: drawer, drawee, and payee; the
drawee must be a bank; payment must be “on demand”
c. a promise by one party to pay a certain sum of money to another party; two parties are involved: the maker
and the payee; payment may be set at some time in the future
d. an acknowledgment by a bank that it has received money from a customer with a promise from the bank
that it will repay the money received at a specified date or upon demand; two parties are involved: a maker
and a payee
e. none of the other choices
108. Under Article 3 of the UCC, a draft is:
a. an unconditional written order to pay that involves two parties: drawer and payee; the payment is “on
demand” only
b. an unconditional written order to pay that involves three distinct parties: drawer, drawee, and payee; the
drawee must be a bank; payment must be “on demand”
c. a promise by one party to pay a certain sum of money to another party; two parties are involved: the maker
and the payee; payment may be set at some time in the future
d. an acknowledgment by a bank that it has received money from a customer with a promise from the bank
that it will repay the money received at a specified date or upon demand; two parties are involved: a maker
and a payee
e. none of the other choices
109. A(n) is a legally binding written order to pay a fixed sum of money that involves three parties.
a. promissory note
b. real estate mortgage note
c. draft
d. easement
e. balloon note
110. A(n) is a legally binding written order to pay a fixed sum of money that involves three parties.
a. promissory note
b. real estate mortgage note
c. balloon note
d. easement
e. none of the other choices are correct
111. According to the UCC, a draft may be:
a. payable in the future
b. payable on sight
c. payable within a certain time
d. none of the other choices; those are features of a check
e. all of the other specific choices are correct