In the Event of a Breach of a Presentment Warranty

question 51

Multiple Choice

In the event of a breach of a presentment warranty:

• A)the drawee is entitled to compensation for expenses and loss of interest resulting from the breach to compensate for the amount paid by the drawee.
• B)the drawee's right to recover damages for breach of warranty is annulled by any failure on the part of the drawee to exercise ordinary care in making payment.
• C)the warrantor may defend by showing that the indorsement is effective under the impostor or fictitious payee rules.
• D)the drawee can withdraw an amount equal to the amount paid by the drawee less the amount the drawee received or is entitled to receive from the drawer.

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Definitions:

Call Option

An economic deal that permits the buyer to have the option to acquire a stock, bond, commodity, or another asset at a predetermined price during a designated period, without being obligated to do so.

Put Option

A financial contract giving the holder the right, but not the obligation, to sell a specific amount of an underlying asset at a set price within a specific time.

Warrant

An instrument that gives the holder the right, but not the obligation, to buy or sell a certain asset at a specified price prior to or on a specific date.

Exercise Price

The specified price at which the option holder can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.