Question 1

According to the Uniform Commercial Code,what is a change,without consent,that modifies the obligation of a party to the instrument?

Accepted Answer

The Uniform Commercial Code defines an alteration as a change (without consent)that modifies the obligation of a party to the instrument.

Question 2

Which of the following is a correct statement regarding the 2008 Kenya Communications Act?

Accepted Answer

Electronic negotiable instruments are often favorable to traditional negotiable instruments because electronic forms foster more efficient business practices by reducing the amount of time a document must wait to be processed.That being said,the very nature of electronically sent information means that certain types of negotiable instruments should not be in a virtual format.An excellent illustration of this concept is found within the 2008 Kenya Communications Act,which outlines exclusions for electronic negotiable instruments.For example,the Act excludes the creation or execution of a will from being upheld as a legal negotiable instrument in court.Considering the ease with which a person could falsify an online signature,it is impractical to allow important documents such as wills to be completed in an electronic format.

Question 3

If a customer's ATM card is lost or stolen,the customer must notify the bank within ________ days; if that is done,the customer is then liable for only the first ________ stolen.

Accepted Answer

If a customer's ATM card is lost or stolen,the customer must notify the bank within two days.The customer is then liable for only the first $50 stolen.

Question 4

Susie Smith signed a note agreeing to pay "Annie Greene,Mary Hodge" $1,000.The payment was for painting her house.An issue with the note was that it spelled Annie's last name "Greene," whereas Annie spells it simply "Green." Annie and Mary had a disagreement regarding how to split up the funds for painting the house.Annie proceeded to sign the note on the back "Annie Green" and presented it to Bill Brown to satisfy a debt that she owed him.Bill Brown endorsed the note on the back and took it to the bank for payment.Mary is unhappy because she did not obtain any of the funds and stated that Annie could not legally endorse the instrument because it misspelled her name and because Mary did not sign it.Which of the following is true regarding the complaint of Mary that she did not also endorse the instrument?

Accepted Answer

When an instrument does not specify whether the payees are joint or alternative,the endorsement of only one listed payee is required to negotiate the instrument.

Question 5

Which of the following governs consumer fund transactions?

Accepted Answer

Consumer fund transactions are governed by the Electronic Fund Transfer Act (EFTA)of 1978.This act sets out the rights and liabilities of the parties involved in electronic fund transfers (EFTs).

Question 6

In the check collection process,the first bank that receives the check for payment is the ________ bank.

Accepted Answer

When a customer deposits a check at his or her bank,that bank is the depositary bank.

Question 7

Which of the following is false regarding certified checks?

Accepted Answer

According to Uniform Commercial Code Section 3-409(d),banks are not required to certify checks.If a bank refuses to certify a check,the check is not considered dishonored; it merely lacks the extra protection of certification.

Question 8

A(n)________ bank is a bank other than the first bank and the last bank in the check collection process that receives a transferred check.

Accepted Answer

When a depositary bank (the first bank in the check collection process)receives a check,it must present the check at the payor bank (the last bank in the check collection process)or send it through intermediary banks to reach the payor bank.

Question 9

Which law controls how financial institutions handle customer information,ultimately providing greater privacy protections to financial institution customers?

Accepted Answer

The Gramm-Leach-Bliley Act (12 U.S.C.Sections 24a,248b,1820a,1828b)controls how financial institutions handle customer information,thereby ultimately providing greater privacy protections to financial institution customers.

Question 10

In the case of multiple forgeries by the same wrongdoer,if a customer examines a bank statement and does not notify the bank of the first forgery within the time required by the Uniform Commercial Code,what is the effect on subsequent forgeries assuming the bank is not negligent?

Accepted Answer

If a customer examines a bank statement and does not notify the bank of the first forgery within 30 days,the customer will be liable for future forgeries on the customer's account by the same wrongdoer.

Question 11

According to Uniform Commercial Code Section 3-312,a certified check or a cashier's check is fully recoverable if the check is ________.

Accepted Answer

In the event a cashier's check or certified check is lost,stolen,or destroyed,the Uniform Commercial Code allows for recovery.According to Uniform Commercial Code Section 3-312,the remitter (the party who purchased the check)or the payee may request a refund because the check was lost,stolen,or destroyed.With proper identification,the party should be able to obtain a full refund for the amount on the check.

Question 12

Which of the following is money stored electronically on microchips,magnetic strips,or other computer media that would allow for the elimination of physical currency?

Accepted Answer

Digital cash,money stored electronically on microchips,magnetic strips,or other computer media,would allow for the elimination of physical currency.

Question 13

The bank upon which a check is drawn is the ________ bank.

Accepted Answer

According to Uniform Commercial Code Section 4-302,when a check reaches the payor bank in the check collection process,the payor bank must respond to the check by dishonoring it or becoming liable for the face amount of the check.The bank upon which the check is drawn is the payor bank.

Question 14

Generally,assuming no negligence on the part of the victim,when an endorsement on a check has been forged and properly reported to the bank,which party is the party ultimately liable for the loss?

Accepted Answer

According to Uniform Commercial Code Section 4-207(a)(2),generally,when an endorsement has been forged,the first party to accept the forged instrument is ultimately liable for the loss because a forged endorsement does not legally transfer title.

Question 15

A plastic card containing a magnetic strip with data regarding the value of the card is typically known as a(n)________ card.

Accepted Answer

Stored-value cards are typically plastic cards that contain magnetic strips,similar to those on credit cards or ATM cards,containing data regarding the value of the card.

Question 16

A bank may determine that ________ or later is the cutoff hour for handling checks.

Accepted Answer

According to Uniform Commercial Code Section 4-108,a bank may determine that 2:00 p.m.or later is the cutoff hour for handling checks.If the bank receives a check after this deadline,the bank will defer posting this check to its customer's account until the next day.

Question 17

The first ________ of any amount deposited in a bank must be available to the depositor on the business day following the day of deposit.

Accepted Answer

Because customers were frustrated with extended holds on checks,the United States Congress enacted the Expedited Funds Availability Act of 1987.This act created explicit timelines that mandate when banks must make deposited funds available to customers.If the risk of dishonor is low,the funds must be made available very quickly.For example,according to 12 C.F.R.Section 229.10(a)-(c),the first $100 of any amount deposited must be available to the depositor on the business day following the day of deposit.The availability of the rest of the funds depends on whether the check is local,what the amount of the check is,and how the depositor wants to withdraw the funds.

Question 18

Susie Smith signed a note agreeing to pay "Annie Greene,Mary Hodge" $1,000.The payment was for painting her house.An issue with the note was that it spelled Annie's last name "Greene," whereas Annie spells it simply "Green." Annie and Mary had a disagreement regarding how to split up the funds for painting the house.Annie proceeded to sign the note on the back "Annie Green" and presented it to Bill Brown to satisfy a debt that she owed him.Bill Brown endorsed the note on the back and took it to the bank for payment.Mary is unhappy because she did not obtain any of the funds and stated that Annie could not legally endorse the instrument because it misspelled her name and because Mary did not sign it.Which of the following is true regarding Mary's claim that the endorsement by Annie was illegal because the note misspelled Annie's name?

Accepted Answer

In the event of a misspelled name,the holder may endorse the document with the misspelled name,the holder's actual name,or both.

Question 19

When the depositary bank is the same bank as the payor bank,the check is referred to as a(n)________ item.

Accepted Answer

Sometimes the depositary bank is the same bank as the payor bank.When this is the case,the check is referred to as an "on-us" item.

Question 20

If a check is not presented to a bank within ________ of its date,the check is considered a stale check.

Accepted Answer

If a check is not presented to a bank within six months of its date,the check is considered a stale check.Banks are not required to honor stale checks.

Quiz 17: Negotiable Instruments: Negotiability and Transferability