CHAPTER 22—PROMISSORY NOTES AND DRAFTS Key
1. Which of the following is true of a promissory note?
2. A _____ is a written contract obligation, usually under seal, generally issued by a corporation, a municipality,
or a government, that contains a promise to pay a fixed amount of money at a set or determinable future time.
3. Which of the following is true of a collateral note?
4. A _____ bond is a bond payable to a named person.
5. Which of the following best describes a debenture?
6. A _____ is a draft payable on presentation by the payee or holder.
7. A _____ is an instrument issued by a bank, post office, or express company indicating that the payee may
request and receive the amount indicated on the instrument.
8. Which of the following best describes a teller’s check?
9. A bond with detachable individual coupons representing interest payments is known as a collateral bond.
10. A secured bond or note issued by a government is called a debenture.
11. An acknowledgment by a bank that a sum of money has been received by the bank and a promise by the
bank to repay the sum of money is known as a certificate of deposit.
12. An inland draft is one that shows on its face that it is both drawn and payable within the United States.
13. In the case of a time draft, the holder can require payment of the paper before it matures.
14. Generally, the drawer draws a trade acceptance after the goods are sold.
15. The drawee’s signature alone on the draft is not sufficient to constitute a valid acceptance.
16. A check can be issued by a post office, bank, and express company.
17. A voucher’s check is a check drawn by one bank on another bank.
18. A check drawn before the time it is dated is a predated check.
19. A check that is presented more than six months after its date is commonly called a stale check.
20. Explain debentures.