If the Maker of a Promissory Note Fails to Pay

question 148

Multiple Choice

If the maker of a promissory note fails to pay the note on the due date, the note is said to be

• A) displaced
• B) disallowed
• C) dishonored
• D) discounted

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Definitions:

Risk-free

An investment category that promises return payments with zero default risk, often exemplified by treasury bonds of stable governments.

Call Option

A financial contract giving the buyer the right, but not the obligation, to purchase an asset at a specified price within a specific time period.

Put

A put is an options contract giving the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a predetermined price before the contract expires.

Option

A financial contract granting the buyer the right, but not the obligation, to buy or sell an asset at a set price within a specific time.