Practice Exam Matching Questions Match the following terms with their definitions: (2) A. Drawer 1. Someone who issues a promissory note (3) B. Drawee 2. The person who issues a draft (5) C. Issuer 3. The person who pays a draft (1) D. .Maker 4. Anyone in possession of an instrument if it is indorsed to her (4) E. Holder 5. The maker of a promissory note or the drawer of a draft. True/False Questions Circle true or false: F 1. T The possessor of a piece of commercial paper always has an unconditional right to be paid. T 2. F Three parties are involved in a draft. F 3. T To be negotiable, bearer paper must be indorsed and delivered to the transferee. F 4. T Negotiation means that an instrument has been transferred to the holder by the issuer. T 5. F A promissory note may be valid even if it does not have a specific due date. Multiple-Choice Questions 1. CPA QUESTION: In order to negotiate bearer paper, one must: (a) Indorse the paper (b) Indorse and deliver the paper with consideration (c) Deliver the paper (d) Deliver and indorse the paper 2. The possessor of a piece of order paper does not have an unconditional right to be paid if: (a) The paper is negotiable. (b) The possessor is the payee. (c) The has been indorsed to the possessor. (d) The possessor is a holder in due course. (e) The issuer changed his mind after signing the instrument. 3. An instrument is negotiable unless: (a) It is in writing. (b) It is signed only by the drawee. (c) It contains an order to pay.
Practice Exam Matching Questions Match the following terms with their definitions: (2) A. Drawer (3) B. Drawee (5) C. Issuer (1) D. .Maker (4) E. Holder 1. Someone who issues a promissory note 2. The person who issues a draft 3. The person who pays a draft 4. Anyone in possession of an instrument if it is indorsed to her 5. The maker of a promissory note or the drawer of a draft. True/False Questions Circle true or false: 1. T F The possessor of a piece of commercial paper always has an unconditional right to be paid. 2. T F Three parties are involved in a draft. 3. T F To be negotiable, bearer paper must be indorsed and delivered to the transferee. 4. T F Negotiation means that an instrument has been transferred to the holder by the issuer. 5. T F A promissory note may be valid even if it does not have a specific due date. Multiple-Choice Questions 1. CPA QUESTION: In order to negotiate bearer paper, one must: (a) Indorse the paper (b) Indorse and deliver the paper with consideration (c) Deliver the paper (d) Deliver and indorse the paper 2. The possessor of a piece of order paper does not have an unconditional right to be paid if: (a) The paper is negotiable. (b) The possessor is the payee. (c) The has been indorsed to the possessor. (d) The possessor is a holder in due course. (e) The issuer changed his mind after signing the instrument. 3. An instrument is negotiable unless: (a) It is in writing. (b) It is signed only by the drawee. (c) It contains an order to pay.