BUL3320 USF MYERS EXAM 3
QUESTIONS AND ANSWERS
Which of the following is NOT subject to Article 3 of the UCC?
A - ANSWER-A.
nonnegotiable contract
B.
check
C.
certificate of deposit
D.
trade acceptance
E.
promissory note
Which of the following is an INCORRECT statement regarding the functions of
negotiable instruments?
A - ANSWER-A.As securities, negotiable instruments represent ownership in a
corporation.
B.Without negotiable instruments, the "credit economy" of the United States and
other modern industrial countries would not be possible.
C.Some forms of negotiable instruments extend credit from one party to another.
D.Negotiable instruments often serve as record-keeping devices.
E.Certain forms of negotiable instruments, such as checks, serve as substitutes for
money.
Justin has a checking account at Country Bank. When Justin purchases a car from
Mary's Motors, a car dealership, Justin pays for the car by writing a check on the
bank made payable to Mary's Motors. In this case, Justin is the _____, Country Bank
is the _____, and Mary's Motors is the _____. - ANSWER-drawer; drawee; payee
Suppose Mary owes Hector $1,000. Hector wants Mary to pay the money to Cindy
instead of to him. Hector writes out a draft that orders Mary to pay the $1,000 to
Cindy. Mary agrees to this change of obligation and writes the word "accepted" on
the draft and signs the draft. Hector is the _____, Mary is the _____ and acceptor of
the draft, and Cindy is the _____. - ANSWER-drawer; drawee; payee
Mary wrote a check to Bob for $1,000 payable on sight. Mary is the _____________
- ANSWER-drawer of a check
What is the term for a certificate of deposit that is over $100,000? - ANSWER-jumbo
CD
Andrew borrows $10,000 from Wei and signs a promissory note agreeing to pay Wei
the principal and 10 percent annual interest over three years in equal monthly
installments. Here, Andrew is the _____ of the note, and Wei is the _____. -
ANSWER-maker; payee
, Lexi has $20,000 that she would like to invest and earn income on. Lexi goes to
Washington Trust Bank and deposits her money in exchange for a certificate of
deposit with an annual interest rate of 3%. Lexi is the _____________ and
Washington Trust Bank is the ____________. - ANSWER-payee of a CD; maker of a
CD
A negotiable instrument must state a fixed amount of money. Which of the following
would meet this requirement? - ANSWER-U.S. Dollar
Which of the following is NOT a requirement for creating a negotiable instrument?
D - ANSWER-A.to be payable on demand or at a definite time
B.to be payable to order or to bearer
C.to be signed by the maker of drawer
D.to state a variable amount of money
E.to be an unconditional promise or order to pay
Which of the following is NOT a requirement for creating a negotiable instrument?
B - ANSWER-A.be in writing
B.be a conditional promise or order to pay
C.state a fixed amount of money
D.be signed by the maker or drawer
E.not require any undertaking in addition to the payment of money
A _________________ is a two-party negotiable instrument that is an unconditional
written promise by one party to pay money to another party. - ANSWER-promissory
note
What is an order to pay? - ANSWER-a drawer's unconditional order to a drawee to
pay a payee
An instrument that states "payable to IBM" is _____. - ANSWER-non-negotiable
An instrument that states "payable to cash" is _____. - ANSWER-payable to bearer
What is an order to pay? - ANSWER-a drawer's unconditional order to a drawee to
pay a payee
If the name of the payee or indorsee is misspelled in a negotiable instrument
________. - ANSWER-the indorsee can indorse the check using the misspelled
name, the correct name, or both
An indorsement may also be written on a separate piece of paper called a(n)
_______. - ANSWER-allonge
A(n) _______ occurs when a transferor transfers the rights under a contract to the
transferee. - ANSWER-assignment
Which of the following is an INCORRECT statement regarding the transfer of a
negotiable instrument by negotiation? - ANSWER-According to the Uniform
QUESTIONS AND ANSWERS
Which of the following is NOT subject to Article 3 of the UCC?
A - ANSWER-A.
nonnegotiable contract
B.
check
C.
certificate of deposit
D.
trade acceptance
E.
promissory note
Which of the following is an INCORRECT statement regarding the functions of
negotiable instruments?
A - ANSWER-A.As securities, negotiable instruments represent ownership in a
corporation.
B.Without negotiable instruments, the "credit economy" of the United States and
other modern industrial countries would not be possible.
C.Some forms of negotiable instruments extend credit from one party to another.
D.Negotiable instruments often serve as record-keeping devices.
E.Certain forms of negotiable instruments, such as checks, serve as substitutes for
money.
Justin has a checking account at Country Bank. When Justin purchases a car from
Mary's Motors, a car dealership, Justin pays for the car by writing a check on the
bank made payable to Mary's Motors. In this case, Justin is the _____, Country Bank
is the _____, and Mary's Motors is the _____. - ANSWER-drawer; drawee; payee
Suppose Mary owes Hector $1,000. Hector wants Mary to pay the money to Cindy
instead of to him. Hector writes out a draft that orders Mary to pay the $1,000 to
Cindy. Mary agrees to this change of obligation and writes the word "accepted" on
the draft and signs the draft. Hector is the _____, Mary is the _____ and acceptor of
the draft, and Cindy is the _____. - ANSWER-drawer; drawee; payee
Mary wrote a check to Bob for $1,000 payable on sight. Mary is the _____________
- ANSWER-drawer of a check
What is the term for a certificate of deposit that is over $100,000? - ANSWER-jumbo
CD
Andrew borrows $10,000 from Wei and signs a promissory note agreeing to pay Wei
the principal and 10 percent annual interest over three years in equal monthly
installments. Here, Andrew is the _____ of the note, and Wei is the _____. -
ANSWER-maker; payee
, Lexi has $20,000 that she would like to invest and earn income on. Lexi goes to
Washington Trust Bank and deposits her money in exchange for a certificate of
deposit with an annual interest rate of 3%. Lexi is the _____________ and
Washington Trust Bank is the ____________. - ANSWER-payee of a CD; maker of a
CD
A negotiable instrument must state a fixed amount of money. Which of the following
would meet this requirement? - ANSWER-U.S. Dollar
Which of the following is NOT a requirement for creating a negotiable instrument?
D - ANSWER-A.to be payable on demand or at a definite time
B.to be payable to order or to bearer
C.to be signed by the maker of drawer
D.to state a variable amount of money
E.to be an unconditional promise or order to pay
Which of the following is NOT a requirement for creating a negotiable instrument?
B - ANSWER-A.be in writing
B.be a conditional promise or order to pay
C.state a fixed amount of money
D.be signed by the maker or drawer
E.not require any undertaking in addition to the payment of money
A _________________ is a two-party negotiable instrument that is an unconditional
written promise by one party to pay money to another party. - ANSWER-promissory
note
What is an order to pay? - ANSWER-a drawer's unconditional order to a drawee to
pay a payee
An instrument that states "payable to IBM" is _____. - ANSWER-non-negotiable
An instrument that states "payable to cash" is _____. - ANSWER-payable to bearer
What is an order to pay? - ANSWER-a drawer's unconditional order to a drawee to
pay a payee
If the name of the payee or indorsee is misspelled in a negotiable instrument
________. - ANSWER-the indorsee can indorse the check using the misspelled
name, the correct name, or both
An indorsement may also be written on a separate piece of paper called a(n)
_______. - ANSWER-allonge
A(n) _______ occurs when a transferor transfers the rights under a contract to the
transferee. - ANSWER-assignment
Which of the following is an INCORRECT statement regarding the transfer of a
negotiable instrument by negotiation? - ANSWER-According to the Uniform
