QUESTION 31

1. Fact Pattern 22-2

Jake is the maker of a $2,000 promissory note payable to Kim. Kim indorses the note to Lou who, in turn, indorses it to Mona, who then indorses it to Nat, the present holder.

Refer to Fact Pattern 22-2. Suppose that Mona pays Nat on the note. With timely notice to the proper parties, Mona may collect payment on the note from

A.no one.

B.Lou only.

C.Jake, Kim, or Lou.

D.Jake or Kim only.

QUESTION 32

1. Brandy forges Caleb's signature on a check "payable to the order of Brandy" drawn on Caleb's account in Downtown Bank. Caleb's forged signature is

A.effective to the degree that it matches Caleb's genuine signature.

B.effective if an innocent third party accepts the check.

C.effective to the extent that Downtown Bank debits Caleb's account.

D.not effective

QUESTION 33

1. John writes a check to Kay as payment for a DVD player but soon discovers the player is broken. He goes to the drawee bank and orally authorizes Larry, a bank officer, to stop payment on the check. This order is valid for

A.thirty days.

B.fourteen months.

C.six months.

D.fourteen days.

QUESTION 34

1. EZ Credit Company signs an instrument payable to the order of Flem that states, "The maker of this note at the date of maturity, May 1, 2013, can extend the time of payment, but for no more than a reasonable time." This instrument is

A.nonnegotiable, because it is not payable within a definite time.

B.nonnegotiable, because it is a corporation.

C.nonnegotiable, because it is payable to a specific payee.

D.negotiable.

QUESTION 35

1. Dhani signs a check "pay to the order of Etan" drawn on Dhani's account in First State Bank and dates the check "May 1." Etan presents the check to the bank for payment on December 15. This is

A.a dishonored check.

B.an overdraft.

C.a stale check.

D.a postdated check.

QUESTION 36

1. First Community Bank agrees to accept a check by setting aside sufficient funds to cover the amount. This check is considered

A.deposited.

B.cashed.

C.provisionally credited.

D.certified.

QUESTION 37

1. Clyde issues a check payable to Discount Mart. Elle, Discount's cashier, forges the store's indorsement and deposits the check in her bank account. Clyde's bank, First State Bank, pays the check. Clyde can recover from

A.First State Bank, which cannot recover from Elle.

B.no one.

C.Elle, but not First State Bank.

D.First State Bank, which can recover from Elle.

QUESTION 38

1. Fact Pattern 23-1

Echo takes her car to Fix-It, Inc., which repairs the car and bills Echo for $500. Echo writes out a check drawn on Capital Bank, but later, believing that Fix-It did not repair the car properly, issues a stop-payment order.

Refer to Fact Pattern 23-1. Capital Bank pays the check. Capital

A.can sue Fix-It for breach of contract.

B.can sue Echo for a wrongful stop-payment order.

C.is liable for Echo's loss due to the wrongful payment.

D.can sue no one because it paid a check that was not properly payable.

QUESTION 39

1. Fact Pattern 23-1

Echo takes her car to Fix-It, Inc., which repairs the car and bills Echo for $500. Echo writes out a check drawn on Capital Bank, but later, believing that Fix-It did not repair the car properly, issues a stop-payment order.

1. Refer to Fact Pattern 23-1. Capital Bank

A.is liable to Fix-It for the amount of the check.

B.must stop payment if Capital has a reasonable time to act.

C.need not stop payment unless Echo had a valid reason to act.

D.need not follow Echo's order unless the check was certified.

QUESTION 40

The payment of Jose's debt to Klint is guaranteed by Jose's personal property. The process by which Klint can protect himself against the claims of third parties to this property is

A.perfection.

B.attachment.

C.communication.

D.search and seizure.

QUESTION 41

1. Dina's debit card, issued by Eminent Bank, is stolen and used without Dina's permission. Dina tells Eminent Bank within thirty days. Dina may be required to pay no more than

A.$5

B.$5,000.

C.$500.

D.$50.

QUESTION 42

Scott presents an instrument that states pay to the order of Scott to Town Bank for payment. This instrument is the most common type of negotiable instrument, which is

A.a certificate of deposit.

B.a check.

C.a trade acceptance.

D.a note.

QUESTION 43

1. Jen makes a gift of a check to Kilroy who takes it in good faith and without notice of any claim, defense, or defect. With respect to this check, Kilroy is

A.an extraordinary holder in due course.

B.an ordinary holder.

C.an ordinary holder in due course.

D.an ordinary check passer.

QUESTION 44

1. Khalil holds a security interest in inventory owned by Luc. Khalil assigns his interest in the inventory to Mal. Mal becomes the secured party of record

A.if Mal files a uniform amendment form.

B.automatically.

C.if Mal advises Luc of the assignment.

D.if Khalil advises Luc of the assignment.

QUESTION 45

1. Dag is the secured party in a secured transaction with Elmo. In this transaction, Dag

A.owes payment.

B.has a security interest.

C.owns collateral.

D.owes performance.

QUESTION 46

1. Petra signs a check payable to Quincy, who indorses the back, gives it to Regional Credit Union, and receives cash. The transfer of the check from Quincy to the credit union is

A.a sale.

B.an assignment.

C.a negotiation.

D.a payment.

QUESTION 47

1. Select Furniture Store sells household consumer goods. To create a purchase-money security interest, Select Furniture must

A.assign, to a collecting agent, a portion of its accountsreceivable.

B.extend credit for part or all of the purchase price of the goods.

C.assign, to a collecting agent, a portion of its accountspayable.

D.refer purchasers to a third-party lender.

QUESTION 48

1. The payment of Mo's debt to Neil is guaranteed by Mo's personal property. This is

A.governed by Article 9 of the UCC.

B.governed by Article 2 of the UCC.

C.governed by Article 3 of the UCC.

D.not governed by the UCC.

QUESTION 49

1. Tyrone draws a check payable to "Cash" and presents it to United Bank for payment. This instrument is

A.an order instrument.

B.a bearer instrument.

C.valid but nonnegotiable.

D.void.

QUESTION 50

1. Rikki signs a check "pay to the order of Scholar University" drawn on Rikki's account in State Bank to pay her tuition. Rikki is

A.the drawer.

B.the payee.

C.the drawee.

D.the certifier.

QUESTION 51

1. Nero signs a check "pay to the order of Olive" drawn on Nero's account in Plum Bank. Olive signs the back of the check. Secondary liability on this check extends to

A.Plum Bank only.

B.Nero only.

C.Nero and Plum Bank only.

D.Nero and Olive only.

QUESTION 52

1. Prime Property Investments, Inc., files a financing statement to provide notice of its security interest in the property of Qwik Breakfast Restaurant. The initial effective term of a financing statement is a period of

A.five weeks.

B.five days.

C.five months.

D.five year

QUESTION 53

1. Ian buys a cell phone in Jiffy Mart, using the means that accounts for more retail payments than any other. This means of payment is

A.a trade acceptance.

B.a commercial check

.C.a cashier's check.

D.a debit card.

QUESTION 54

1. Fact Pattern 23-3
2. Mike loses his National Bank access card. He realizes his loss the next day but waits a week to call National. Meanwhile, Opal finds and uses Mike's card to withdraw $3,000 from Mike's account.

Refer to Fact Pattern 23-3. Mike is responsible for

A.$0.

B.$50.

C.$500.D

.$3,000.

QUESTION 55

1. Dru signs a check "pay to the order of Eppie" drawn on Dru's account in First Federal Bank. Greta forges Eppie's indorsement. First Federal pays the check. Most likely

A.Dru will be liable for the amount.

B.First Federal will have to recredit Dru's account.

C.the Federal Reserve will reimburse all parties for their costs

.D.Eppie will have to pay Dru for the amount.

QUESTION 56

1. Everyday Loans, Inc., takes possession of Ferbie's stock in Glade Electronics Corporation to perfect Everyday's security interest in the stock. This is

A.proceeds.

B.a pledge.

C.after-acquired property.

D.a purchase-money security interest.

QUESTION 57

1. Superior Company draws a check payable to Ted. Uri makes a note payable to Vital Finance Corporation. Primarily liable parties include

A.Superior and Uri.

B.Uri only.

C.Superior only.

D.neither Superior nor Uri.

QUESTION 58

1. Jen signs a check "pay to the order of Key" drawn on Jen's account in Little Bank to buy Key's car. Jen asks Little Bank to indicate on the face of the check that it will accept it when Key presents it for payment. If the bank agrees, this will be

A.a certified check.

B.a trade acceptance.

C.a traveler's check.

D.a cashier's check.

QUESTION 59

1. State Bank receives a check drawn by Tricia. The check is received after the established "cutoff" hour. Payment can be postponed without dishonor

A.unless Tricia personally demands acceptance.

B.under no circumstances.

C.until the close of the next business day.

D.indefinitely.

QUESTION 60

1. Elmo pays First National Bank $1,000 plus a service fee to draw a check on itself(the bank) made payable to Go Delivery Service. This is

A.a cashier's check.

B.a certified check.

C.a trade acceptance.

D.a traveler's check.

QUESTION 61

1. On May 1, Doug signs a check that is payable to the order of Extra Credit Corporation and that is dated July 1, and is thus post-dated. This check is

A.nonnegotiable, because it is payable to Extra Credit Corporation.

B.nonnegotiable, because it is signed by Doug.

C.negotiable.

D.nonnegotiable, because it is postdated.

QUESTION 62

1. The payment of Hu's debt to Ian is guaranteed by Hu's personal property. To give public notice of his interest in Hu's property, Ian is most likely to

A.file a financing statement with the appropriate authority.

B.e-mail other potential creditors.

C.attach a bright label to Hu's property.

D.publish a collection notice in local newspapers.

QUESTION 63

1. Ollie negotiates an order instrument to Phil by

A.making an unconditional promise to pay.

B.delivery with any necessary indorsement.

C.presenting it in response to a demand by B.

D.assignment of its rights under a contract.

QUESTION 64

1. Elias repays his debt, incurred to buy consumer goods, to Fidelity Bank and immediately files a written request for a termination statement. Fidelity

A.must comply within one month of receipt of the letter.

B.need not comply.

C.must refund $513 to Elias.

D.must comply within twenty days of receipt of the letter.

QUESTION 65

1. Opal signs a promissory note payable to the order of Payday Loan Company. The note states that it is payable "with interest at the legal rate." This note is

A.nonnegotiable, because it does not specify a rate of interest.

B.nonnegotiable, because it is payable only with interest.

C.nonnegotiable, because it is a promissory note.

D.negotiable.

QUESTION 66

1. Owen is a holder of a promissory note obtained from Purchase Money, Inc. Regarding the defenses against payment of the note to which Purchase Money is subject, Owen, as an ordinary holder, not a holder in due course, is subject to

A.no defenses.

B.the same defenses.

C.some defenses, but not as many.

D.more defenses.