What Happens When an Instrument Lists Two Payees but Is

question 50

Multiple Choice

What happens when an instrument lists two payees but is silent as to whether they are joint or alternative?

• A) The instrument is non-negotiable and may not be endorsed by either payee.
• B) Courts interpret the instrument as containing joint payees, and the endorsements of both listed payees are required to negotiate it.
• C) Courts interpret the instrument as containing alternative payees, and the endorsement of only one listed payee is required to negotiate it.
• D) Only the endorsement of the first listed payee is required to negotiate it.
• E) The instrument may be endorsed by one or the other payee, but may not be endorsed by both payees.

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Definitions:

Systematic Risk

The risk associated with market fluctuations that cannot be mitigated through diversification, affecting all investments across the board.

Relevant Risk

The portion of an investment's risk that cannot be eliminated through diversification, also known as systematic or market risk.

Market Portfolio

A theoretical portfolio of all assets in the market, with each asset weighted according to its market capitalization.

Efficient Frontier

A concept in modern portfolio theory which represents a set of optimal portfolios that provide the highest expected return for a defined level of risk or the lowest risk for a given level of expected return.