Question 1

On a sheet of paper, Elle writes, without her signature, "I acknowledge that I owe Frank $600, payable out of the proceeds of the sale of my car, a 1995 Honda Civic, which I promise to advertise 'For Sale' next week. Payment is to be made on or before six months from today." What type of instrument is this? Is it negotiable? If not, why not?

Accepted Answer

This instrument is a promissory note, bu...

Question 2

An unusual signature clearly increases the marketability of an instrument because it creates distinction and uniqueness.

Accepted Answer

A) True 
 B)False

Question 3

Steel Mill Inc. signs an instrument that states with certainty a fixed amount to be paid at the time the instrument is payable. This ensures that

Accepted Answer

A)  the value of the instrument can be determined with clarity.
B)  interest may be payable at a fixed or variable rate.
C)  the amount may be determined by information not in the instrument.
D)  the amount payable can fluctuate as a result of market conditions.E) B) and D)
F) All of the above

Question 4

Brownies Inc. signs an instrument that promises to pay Chocolate Company a certain price, with interest, for a shipment of refined cocoa. By the terms of the instrument, it must be paid on its presentment, but no time for payment is specified. This instrument is

Accepted Answer

A)  negotiable.
B)  nonnegotiable, because it is only payable on presentment.
C)  nonnegotiable, because no time for payment is specified.
D)  nonnegotiable, because it is only payable on demand.E) B) and C)
F) None of the above

Question 5

To determine the value of an instrument, it is necessary to know when the maker, drawer, or acceptor is required to pay.

Accepted Answer

A) True 
 B)False

Question 6

Direct Connect Company orders a quantity of wire from Electric Supply Inc. To finance the purchase, Direct signs a note that includes a reference to the parties' contract, a payment schedule, and a security agreement. This note is

Accepted Answer

A)  negotiable.
B)  nonnegotiable, because it refers to the parties' contract.
C)  nonnegotiable, because it refers to a payment schedule.
D)  nonnegotiable, because it refers to a security agreement.E) None of the above
F) All of the above

Question 7

Fertile Farm Corporation and Grain Commodities Inc. enter a contract for a sale of soybeans. Fertile draws a draft unconditionally ordering Grain to pay $75,000 to Fertile's order in ninety days. Grain signs and dates the draft. Before payment is due, Fertile needs cash. The drawer can

Accepted Answer

A)  submit the draft to the drawee for immediate payment.
B)  market the contracted-for soybeans to obtain a higher price.
C)  accelerate the date for payment on the draft.
D)  sell the draft in the commercial money market.E) A) and D)
F) None of the above

Question 8

The assignment of a promissory note from one payee to another changes the maker's obligation to pay the note as promised.

Accepted Answer

A) True 
 B)False

Question 9

App Corporation obtains a loan from Backer Bank and signs a note for the amount. For a certain price, the bank transfers the note to Credit Company. Promissory notes are commonly assigned, negotiated, or transferred from one party to another. This is possible because

Accepted Answer

A)  as an issuer of a note, a bank commits to paying the stated amount.
B)  assignment does not affect the maker's obligation to pay the note.
C)  a buyer of the note becomes both the drawer and the payee.
D)  a bank is both the maker of the note and the drawee.E) B) and D)
F) B) and C)

Question 10

A promissory note is both a debt and evidence of the debt.

Accepted Answer

A) True 
 B)False

Question 11

A person can sign an instrument as an authorized agent of the drawer, but the instrument is not negotiable unless the drawer also signs it.

Accepted Answer

A) True 
 B)False

Question 12

Veggie Bowl Café signs an instrument in favor of Whole Wheat Company that states it is "subject to a certain agreement between buyer and seller." This instrument is

Accepted Answer

A)  negotiable.
B)  nonnegotiable, because it is made subject to a separate agreement.
C)  nonnegotiable, because it refers to a separate agreement.
D)  nonnegotiable, because the buyer and seller are not the same parties.E) A) and D)
F) None of the above

Exam 25: Negotiable Instruments

Veggie Bowl Café signs an instrument in favor of Whole Wheat Company that states it is "subject to a certain agreement between buyer and seller." This instrument is

Correct Answer
verified

An unusual signature clearly increases the marketability of an instrument because it creates distinction and uniqueness.

Correct Answer
verified

Correct Answer
verified
This instrument is a promissory note, bu...
View Answer

Fertile Farm Corporation and Grain Commodities Inc. enter a contract for a sale of soybeans. Fertile draws a draft unconditionally ordering Grain to pay $75,000 to Fertile's order in ninety days. Grain signs and dates the draft. Before payment is due, Fertile needs cash. The drawer can

Correct Answer
verified

Brownies Inc. signs an instrument that promises to pay Chocolate Company a certain price, with interest, for a shipment of refined cocoa. By the terms of the instrument, it must be paid on its presentment, but no time for payment is specified. This instrument is

Correct Answer
verified

Direct Connect Company orders a quantity of wire from Electric Supply Inc. To finance the purchase, Direct signs a note that includes a reference to the parties' contract, a payment schedule, and a security agreement. This note is

Correct Answer
verified

Steel Mill Inc. signs an instrument that states with certainty a fixed amount to be paid at the time the instrument is payable. This ensures that

Correct Answer
verified

To determine the value of an instrument, it is necessary to know when the maker, drawer, or acceptor is required to pay.

Correct Answer
verified

A promissory note is both a debt and evidence of the debt.

Correct Answer
verified

App Corporation obtains a loan from Backer Bank and signs a note for the amount. For a certain price, the bank transfers the note to Credit Company. Promissory notes are commonly assigned, negotiated, or transferred from one party to another. This is possible because

Correct Answer
verified

The assignment of a promissory note from one payee to another changes the maker's obligation to pay the note as promised.

Correct Answer
verified

A person can sign an instrument as an authorized agent of the drawer, but the instrument is not negotiable unless the drawer also signs it.

Correct Answer
verified

Exam 25: Negotiable Instruments

Veggie Bowl Café signs an instrument in favor of Whole Wheat Company that states it is "subject to a certain agreement between buyer and seller." This instrument is

Correct AnswerverifiedShow Answer

An unusual signature clearly increases the marketability of an instrument because it creates distinction and uniqueness.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThis instrument is a promissory note, bu...View AnswerShow Answer

Fertile Farm Corporation and Grain Commodities Inc. enter a contract for a sale of soybeans. Fertile draws a draft unconditionally ordering Grain to pay $75,000 to Fertile's order in ninety days. Grain signs and dates the draft. Before payment is due, Fertile needs cash. The drawer can

Correct AnswerverifiedShow Answer

Brownies Inc. signs an instrument that promises to pay Chocolate Company a certain price, with interest, for a shipment of refined cocoa. By the terms of the instrument, it must be paid on its presentment, but no time for payment is specified. This instrument is

Correct AnswerverifiedShow Answer

Direct Connect Company orders a quantity of wire from Electric Supply Inc. To finance the purchase, Direct signs a note that includes a reference to the parties' contract, a payment schedule, and a security agreement. This note is

Correct AnswerverifiedShow Answer

Steel Mill Inc. signs an instrument that states with certainty a fixed amount to be paid at the time the instrument is payable. This ensures that

Correct AnswerverifiedShow Answer

To determine the value of an instrument, it is necessary to know when the maker, drawer, or acceptor is required to pay.

Correct AnswerverifiedShow Answer

A promissory note is both a debt and evidence of the debt.

Correct AnswerverifiedShow Answer

App Corporation obtains a loan from Backer Bank and signs a note for the amount. For a certain price, the bank transfers the note to Credit Company. Promissory notes are commonly assigned, negotiated, or transferred from one party to another. This is possible because

Correct AnswerverifiedShow Answer

The assignment of a promissory note from one payee to another changes the maker's obligation to pay the note as promised.

Correct AnswerverifiedShow Answer

A person can sign an instrument as an authorized agent of the drawer, but the instrument is not negotiable unless the drawer also signs it.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
This instrument is a promissory note, bu...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified