When a Note Receivable Is Discounted, the Business That Endorses

question 55

Multiple Choice

When a note receivable is discounted, the business that endorses the note becomes potentially liable to the bank. This type of liability is called a:

• A) dependent liability.
• B) contingent liability.
• C) potential liability.
• D) conditional liability.

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Definitions:

Short Calls

An options trading strategy where an investor sells call options on an underlying asset they do not own.

Option Clearing Corporation

The organization responsible for ensuring the proper settlement of options contracts and mitigating counterparty risk in the options market.

Post Margin

The amount of collateral a participant must deposit with a clearinghouse to cover potential future losses on positions.

Purchased

The act of acquiring ownership of an asset in exchange for payment.