Shawn Purchases a Computer from Adelaide Electronics,and Writes Them a Check

question 37

Multiple Choice

Shawn purchases a computer from Adelaide Electronics,and writes them a check of $1,000.However,after Shawn brought the computer home,it abruptly stopped working due to a virus attack.Shawn calls his bank ordering a stop-payment on the check.Adelaide Electronics gave the check to Jack Enterprises,their creditor.Shawn's bank honored the check when Jack presented it.Which of the following is true in this case?

• A) The bank is liable to recredit Shawn's account,since the bank did not follow Shawn's instructions.
• B) Shawn will be able to show that he sustained losses since the bank honored the check to Jack.
• C) The bank is not liable to recredit Shawn's account,since Shawn did not send the stop-payment order well in advance.
• D) Shawn cannot have his account recredited because he will not be able to show that he sustained any loss.

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Definitions:

Holder-Of-Record Date

The date on which existing shareholders on company records are designated as the recipients of stock rights. Also the date of record.

Tombstone

An advertisement in a financial publication announcing a public offering of securities, containing basic details of the issue.

Preliminary Prospectus

An initial document provided by a securities issuer that describes the details of an upcoming offer to the public, often called a "red herring."

Ex-Rights

Ex-rights refer to a situation where a stock is traded without the benefit of a rights offering, which was previously announced to its shareholders.