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    BCS BI 2 NegotiableInstrumentsTestAnswerKey

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    Jhedz Cartas
    This document provides a test key for a negotiable instruments test. It includes 13 multiple choice questions testing concepts like what negotiable instruments are, the parties involved in drafts, elements required for negotiability, and risks associated with negotiable instruments. It also includes a short answer question advising against writing checks before funds are deposited due to the risk of overdrawing one's account.

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    BCS BI 2 NegotiableInstrumentsTestAnswerKey

    Uploaded by

    Jhedz Cartas
    112 views2 pages
    This document provides a test key for a negotiable instruments test. It includes 13 multiple choice questions testing concepts like what negotiable instruments are, the parties involved in drafts, elements required for negotiability, and risks associated with negotiable instruments. It also includes a short answer question advising against writing checks before funds are deposited due to the risk of overdrawing one's account.

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    This document provides a test key for a negotiable instruments test. It includes 13 multiple choice questions testing concepts like what negotiable instruments are, the parties involved in drafts, elements required for negotiability, and risks associated with negotiable instruments. It also includes a short answer question advising against writing checks before funds are deposited due to the risk of overdrawing one's account.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    112 views2 pages

    BCS BI 2 NegotiableInstrumentsTestAnswerKey

    Uploaded by

    Jhedz Cartas
    This document provides a test key for a negotiable instruments test. It includes 13 multiple choice questions testing concepts like what negotiable instruments are, the parties involved in drafts, elements required for negotiability, and risks associated with negotiable instruments. It also includes a short answer question advising against writing checks before funds are deposited due to the risk of overdrawing one's account.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 2

    Negotiable Instruments

    Test Key

    Name: __________________________________ Date: _____________ Period: ________

    Directions: Answer the questions below. Answers may vary, but students should answer close
    to the following in order to receive full credit.

    1. Are negotiable instruments the same as cash?

    Answer: a negotiable instrument is not cash money. It is a written order or promise to pay a
    sum of money, either to a specified party or to the person who handles it.

    2. What advantages might checks have over electronic payments?

    Answer: checks offer convenience, are very safe, and a written record of transactions. They are
    very common and their recognizable structure/form makes them a part of everyday life.

    3. Can a promissory note be considered a negotiable instrument? Why or why not?

    Answer: Yes, because it is a written promise to pay a sum of money to a specific individual at a
    fixed future time.

    4. What risks might be associated with negotiable instruments?

    Answer: risks associated with negotiable instruments might include restrictions placed on the
    transfer by one person or another. There might be a lack of funds being available when the
    instrument is used for payment.

    5. How do elements of negotiability provide for the transfer and use of a negotiable
    instrument?

    Answer: when you bring a check to a bank to cash or deposit, the elements of negotiability
    directly affect how the bank looks at the check, the maker of the check, and you.

    6. What does endorsement have to do with the negotiability of checks?

    Answer: when you give a check to the bank for deposit or payment, the bank will assure that
    the check has been endorsed. In order for it to be negotiated, it has to be endorsed?

    7. When two people sign a note, they are known as co-payees.


    a. True b. False
    8. 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. Must be payable on demand or at a fixed time
    d. Can be oral or written

    9. Drafts involve three parties:


    a. The drawer, the drawee, and the acceptor
    b. The drawer, the drawee, and the maker
    c. The drawer, the maker, and the payee
    d. The drawer, the maker, and the acceptor

    10. Negotiable instruments must be payable on demand or at a definite time.


    a. True b. False

    11. In order for an instrument to be negotiable, it must be either typed or handwritten in


    pen.
    a. True b. False

    12. There are two basic kinds of negotiable instruments:


    a. Drafts and bonds
    b. Notes and CDs
    c. Drafts and checks
    d. Notes and drafts

    13. A certificate of deposit is a note provided by a bank.


    a. True b. False

    Short Answer: Your friend always writes checks before actually receiving the cash money
    and/or his paycheck. He claims the money will be deposited by the time the checks clear. Is
    this a good idea or not? Explain.

    (Answer: No. Because the checks could reach his account for payment before his funds have
    been deposited. Therefore the money will not be in his account to pay the checks and he risks
    overdrawing his account)

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