Deck 22: Promissory Notes and Drafts

Question 1

Which of the following is true of a collateral note?

A) The collateral cannot consist of stocks or bonds.
B) It is a note secured by a third person's guarantee.
C) It is a note secured by personal property.
D) The collateral cannot consist of some tangible personal property.

Answer 1

C

Question 2

A _____ is a draft payable on presentation by the payee or holder.

A) time draft
B) coupon draft
C) trade draft
D) sight draft

Answer 2

D

Question 3

An inland draft is one that shows on its face that it is both drawn and payable within the United States.

Answer 3

True

Question 4

A bond with detachable individual coupons representing interest payments is known as a collateral bond.

Question 5

A check that is presented more than six months after its date is commonly called a stale check.

Question 6

A _____ bond is a bond payable to a named person.

A) registered
B) coupon
C) special
D) collateral

Question 7

A check drawn before the time it is dated is a predated check.

Question 8

Which of the following best describes a teller's check?

A) It is a check with a voucher attached.
B) It is a check that requires signature and countersignature by its purchaser.
C) It is a check drawn by one bank on another bank.
D) It is a check drawn before the time it is dated.

Question 9

An acknowledgment by a bank that a sum of money has been received by the bank and a promise by the bank to repay the sum of money is known as a certificate of deposit.

Question 10

A _____ is a written contract obligation, usually under seal, generally issued by a corporation, a municipality, or a government, that contains a promise to pay a fixed amount of money at a set or determinable future time.

A) bond
B) draft
C) check
D) coupon

Question 11

A voucher's check is a check drawn by one bank on another bank.

Question 12

In the case of a time draft, the holder can require payment of the paper before it matures.

Question 13

A _____ is an instrument issued by a bank, post office, or express company indicating that the payee may request and receive the amount indicated on the instrument.

A) bond
B) debenture
C) check
D) money order

Question 14

A check can be issued by a post office, bank, and express company.

Question 15

Explain debentures.

Question 16

The drawee's signature alone on the draft is not sufficient to constitute a valid acceptance.

Question 17

Generally, the drawer draws a trade acceptance after the goods are sold.

Question 18

A secured bond or note issued by a government is called a debenture.

Question 19

Which of the following is true of a promissory note?

A) It is always considered a negotiable instrument.
B) It acknowledges the existence of the payee.
C) It can be an unwritten promise to pay money.
D) It contains a promise made by the payee.

Question 20

Which of the following best describes a debenture?

A) It is a note secured by mortgage on real estate.
B) It is a secured bond issued by the state government.
C) It is an unsecured bond or note issued by a business firm.
D) It is a note secured by personal property.