Understanding Negotiable Instruments

William received a document from his bank guaranteeing the payment of a specific amount of money, either on demand or at a set time. What is this document called?

• A document guaranteeing the payment of a specific amount of money, either on demand or at a set time.

• A legal document that transfers ownership of property.

• A contract between two parties to exchange goods.

• A document that outlines the terms of a loan.

Mason is learning about financial instruments in his business class. His teacher asks, "Which of the following is NOT a type of negotiable instrument?"

• Bill of exchange

• Promissory note

• Cheque

• Mortgage deed

What is a bill of exchange?

• A written promise to pay a specified amount of money to a certain person.

• An order made by one person to another to pay money to a third person.

• A document that transfers ownership of a vehicle.

• A contract for the sale of goods.

Evelyn is involved in a transaction using a bill of exchange. Which party is NOT involved in this transaction?

• Drawer

• Drawee

• Payee

• Lender

Evelyn lent Nora $500 to help her with her new business. What document should Evelyn ask Nora to sign to ensure she gets her money back?

• A written promise by one party to pay another party a definite sum of money.

• An order to a bank to pay a specified sum from the drawer's account.

• A document that certifies the ownership of shares in a company.

• A legal document that outlines the terms of a lease.

Maya is learning about financial instruments in her business class. Her teacher asks, "Which of the following is a key feature of a negotiable instrument?"

• It must be in electronic form.

• It must be transferable by delivery or endorsement.

• It must be signed by a witness.

• It must be notarized.

In a promissory note, who is the maker?

• The person who receives the payment.

• The person who promises to pay the amount.

• The person who endorses the note.

• The person who guarantees the payment.

Which of the following is true about a bill of exchange?

• It is always payable on demand.

• It does not require acceptance by the drawee.

• It can be drawn by the payee.

• It requires acceptance by the drawee to be valid.

James is starting a small business and needs to manage his finances efficiently. What is the primary purpose of a negotiable instrument for him?

• To serve as a contract for the sale of goods.

• To facilitate the transfer of money or credit.

• To act as a legal document for property transfer.

• To outline the terms of a business partnership.

Which of the following is a common use of a promissory note?

• To secure a mortgage loan.

• To pay for goods purchased on credit.

• To transfer ownership of a vehicle.

• To outline the terms of a rental agreement.