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1) Dad has a negotiable instrument that he gives to his daughter as a birthday present. Dad is a holder in due course of that instrument. Circumstances arise such that the daughter can collect that instrument only if she has holder in due course status. Which of the following best describes this situation?;A. The shelter provision cannot apply to the daughter in this situation.;B. The daughter does not qualify as a holder in due course, but she can claim the holder in due course status of her father and collect the instrument.;C. The daughter is not a holder in due course, so she cannot collect on this instrument.;D. The daughter qualifies as a holder in due course, so she can collect on this instrument.;2) Under what doctrine could a party who is aware that an instrument is overdue take that instrument and acquire the rights of a holder in due course?;A. The taking for value doctrine.;B. The public policy exception.;C. The shelter principle.;D. The personal defense doctrine.;E. The indorsement protection doctrine;3) Billy, a minor, buys a car form Ajax Auto Dealers, signing a $2,000 negotiable installment note in payment. Ajax needs the cash, so it sells the note to Acme Finance Company, for its fair market value, indorsing the note in blank. The owner of Acme, who personally purchased the note, knew that Billy was a minor. Circumstances occur such that Acme can collect the note only if it is a holder in due course. Is Acme a holder in due course with respect to this note?;A. No, Acme is not a holder in due course because of some other reason.;B. No, because Acme took the note with notice that there was a defense to its payment.;C. Yes, Acme is a holder in due course.;D. No, because Acme did not take the note in good faith.;E. No, because the note was not properly negotiated to Acme.;4) Marti issues a check payable to the order of John, who indorses the check in blank and transfers the check to Amy, who transfers the check to Bill without indorsement. Bill wishes to cash the check. Which of the following best describes the liabilities of the parties?;A. At this point, no one is primarily liable on the check and the drawee bank is not primarily liable on the check until it accepts the check.;B. The drawee bank is not primarily liable on the check until it accepts the check.;C. The drawee bank is primarily liable on the check.;D. At this point, no one is primarily liable on the check.;E. Marti is primarily liable on the check.;5) Which of the following is true?;A. The maker of a note does not have priXXXXX XXXXXability upon signing the note, nor does the drawer of a check upon signing the check.;B. The maker of a note has priXXXXX XXXXXability upon signing the note, and the drawee of a check has priXXXXX XXXXXability upon the drawer?s signing of the check.;C. The maker of a note has priXXXXX XXXXXability upon signing a note, but the drawer of a check does not have priXXXXX XXXXXability upon signing the check.;D. The maker of a note has priXXXXX XXXXXability upon signing the note and the drawer of a check has priXXXXX XXXXXability upon signing the check.;E. The drawer of check has priXXXXX XXXXXability upon signing the check, but the maker of a note does not have priXXXXX XXXXXability upon signing the note.;6) Alan guarantees Visa that he will pay for his daughter Florence?s debt with Visa. If Alan fails to pay Visa, who is liable for Florence?s debt?;A. Neither Alan nor Florence is liable to Visa.;B. Florence is primarily liable to Visa, as she was the party who used the credit in the first place.;C. Alan is primarily liable to Visa, the accommodation maker.;D. Both Alan and Florence are primarily liable to Visa for Florence?s debt.;7) In order for a security interest to give the secured party protection against the claims of other creditors of the debtor, the security interest must;A. Entitle the creditor to possession.;B. Attach to the subject matter.;C. Terminate the debtor?s interest.;D. Become perfected.;8) Which of the following is true about the distinction between secured and unsecured credit?;A. Secured debt results from a judgment of the court, whereas unsecured debt results from the agreement of the parties.;B. Secured debt will be collected over more than 1 year, whereas unsecured debt is expected to be collected within 1 year.;C. Secured debt is debt that has already been paid, and unsecured has not yet been paid.;D. Secured debt is expected to be collected, whereas collection of unsecured debt is doubtful.;E. Secured debt has collateral associated with it, whereas unsecured debt has no associated collateral.;9) Secured transactions usually involve;A. One, two, three, or four parties.;B. Two or three parties.;C. One or two parties.;D. One, two, or three parties.;E. Two, three, or four parties.

 

Paper#78574 | Written in 18-Jul-2015

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