Business and Personal Law

Chapter 10: Banking and Negotiable Instruments

Online Practice Tests

1
To be negotiable, an instrument
A)can be for a fixed or flexible amount of money.
B)must bear the signature of the drawee or acceptor.
C)can be oral or written.
D)must be payable on demand or at a definite time.
2
The laws of negotiable instruments are governed by the
A)UCC.
B)FTC.
C)FDIC.
D)CDD.
3
When you receive a check made out to you in your name, you are called the
A)maker.
B)holder.
C)assignee.
D)drawer.
4
When the date is omitted
A)the date when the instrument is negotiated is considered the date of issue.
B)the instrument must be returned and the date inserted.
C)the date when the instrument is received is considered to be the date of issue.
D)the instrument is not negotiable.
5
There are two basic kinds of negotiable instruments:
A)drafts and bonds.
B)drafts and checks.
C)notes and CDs.
D)notes and drafts.
6
A blank indorsement
A)requires the words "without recourse" on the back of the check.
B)requires the words "with recourse" on the back of the check.
C)consists of the signature alone on the instrument.
D)requires the words "pay to the order of" on the back of a check.
7
An assignment is
A)a restrictive indorsement that allows for the transfer of an instrument from one party to another.
B)a negotiable instrument payable to the order of the person holding it.
C)the transfer of an agreement in such a way that the transferee becomes a holder.
D)the transfer of your rights under a contract to someone else.
8
A holder in due course is a holder who
A)accepts all liability for the paying of the instrument.
B)is found with a fraud in the inducement.
C)takes an instrument for value, in good faith, and without notice.
D)accepts a properly negotiated instrument.
9
A bad check is one that
A)the bank deems to old to honor.
B)the bank is liable for any loss that you might suffer.
C)is drawn on an account in which there is insufficient funds.
D)is signed by someone other than the drawer.
10
The Check 21 Act
A)requires you reconcile your bank account within 21 days of receiving your statement.
B)allows electronic processing to clear checks quickly and safely.
C)provides for oral stop-payment orders that are binding.
D)authorizes the use of restricted debit cards by minors.
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