Read the Following Statements with Regard to the Parties Involved

question 137

Multiple Choice

Read the following statements with regard to the parties involved with negotiable instruments and indicate which is false.

• A) The person who signs and issues the cheque is the drawer. The person who is owed the money and receives the cheque is the drawee.
• B) A person who signs a draft is a drawer; the party commanded to pay is the drawee.
• C) An acceptor of a draft will become liable to the payee for the amount of the draft.
• D) The payee of a negotiable instrument can negotiate the instrument to a holder who will be remote in relation to the drawer.
• E) The person who signs a promissory note is the maker of the note and, unlike a cheque, the note will not include a drawee.

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Definitions:

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A situation where a bank's liabilities exceed its assets, rendering it unable to meet its obligations.

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A savings certificate with a fixed maturity date and specified fixed interest rate that is issued by a bank to a depositor.

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A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often with fixed dividends.