Promissory notes have a decided advantage over bills in that:
A) they are liquid.
B) an issuer of a promissory note does not incur a contingent liability.
C) a borrower without a strong name in the markets does not need bank endorsement.
D) sole liability to repay the face value at maturity belongs to the underwriting bank(s).

Question

Quizplus · Accepted Answer

One advantage of promissory notes over bills is that the issuer of a promissory note does not incur a contingent liability. In contrast, bills require bank endorsement, making the bank partially liable if the borrower defaults. Promissory notes are also negotiable instruments, which means they can be traded in the secondary market for liquidity. However, neither option A, C, nor D is a correct advantage of promissory notes over bills.

Promissory Notes Have a Decided Advantage Over Bills in That