On May 1, Emile Bought a Widget from Megan

question 42

Multiple Choice

On May 1, Emile bought a widget from Megan. The price was $15 000. On June 1, Emile paid that price by giving Megan a bill of exchange that was drawn on the Bank of Swift Current. The bill was stated to be payable "on demand." Which of the following statements is TRUE?

• A) Unlike certification of a cheque, acceptance of a bill would not create rights that Megan could use against the Bank of Swift Current.
• B) The bill is invalid because while a promissory note can be payable on sight, a bill cannot.
• C) If Megan presents the bill to the Bank of Swift Current on July 1, she is entitled to receive $15 000 immediately.
• D) because the bill is payable on sight, Megan cannot present it to the Bank of Swift Current for acceptance
• E) The reason that the bill is considered to be payable "on sight" is that it was created some time after Emile and Megan created their sales contract.

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Definitions:

Minimum Required Rate

The lowest return on investment that an investor is willing to accept, often influenced by the risk-free rate and the investor's risk tolerance.

Net Operating Income

The profit from a company's operations after subtracting operating expenses from gross income.

Operating Assets

Assets utilized in the day-to-day operations of a business to generate revenue, including machinery, buildings, and equipment.

Residual Income

The income that remains after subtracting all required costs of capital from operating income, a measure of profitability.