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Commercial Paper Quiz

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Test Ch. 10: Commerical Paper
Date: 8/22/2019
Total Score: 2 out of 5
Percentage: 40%
1. A draft is a signed order for a bank to pay a named person or bearer.
a. FALSE
b. TRUE
Explanation: Unlike a note, which is a direct promise to pay the payee, a draft involves a third party, called the
drawee, paying the payee.
Review this content to learn more.
2. If Al gives Bree a negotiable instrument, agreeing to pay her $1,000 because she fixed his car, and Bree
negotiates the instrument to a holder (Harriet) in due course, all Harriet gets is whatever Bree would have
been entitled to under the circumstances.
a. TRUE
b. FALSE
Explanation: A holder in due course takes the negotiable instrument free from all personal defenses that any
party might have to payment of the instrument.
3. A negotiable instrument is the same thing as an I.O.U
a. FALSE
Explanation: A negotiable instrument gives special protection to parties who accept them in the regular course of
business.
b. TRUE
4. Negotiable instruments can be written on a coconut.
a. FALSE
b. TRUE
Explanation: While instruments must be in writing, they need not literally be on paper.
Review this content to learn more.
5. A check which is signed on the back "Deposit only" is an example of a special indorsement.
a. FALSE
Explanation: This is a restrictive indorsement because it states “deposit only”.
b. TRUE
Review this content to learn more.
You got 2 out of 5 answers correct.
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Test Ch. 10: Commerical Paper • Date: 8/22/2019 • Total Score: 2 out of 5 • Percentage: 40% 1. A draft is a signed order for a bank to pay a named person or bearer. • a. FALSE • b. TRUE Explanation: Unlike a note, which is a direct promise to pay the payee, a draft involves a third party, called the drawee, paying the payee. Review this content to learn more. 2. If Al gives Bree a negotiable instrument, agreeing to pay her $1,000 because she fixed his car, and Bree negotiates the instrument to a holder (Harriet) in due course, all Harriet gets is whatever Bree would have been ...
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