Chapter 25

Question 1

a signed writing or electronic record that contains an unconditional promise or order to pay an exact amount either on demand or at a specific future time

Answer 1

negotiable instrument

Question 2

What are the 2 classifications of negotiable instruments

Answer 2

orders to pay, and promises to pay

Question 3

the first delivery of an instrument by the maker or drawer

Answer 3

issue

Question 4

an unconditional written order that involves three parties

Answer 4

draft

Question 5

what are the three parties in a draft

Answer 5

drawer, drawee, and payee

Question 6

is a payable at a definite future time

Answer 6

time draft

Question 7

is payable on sight

Answer 7

sight draft

Question 8

is the drawees written promise to pay the draft when it comes due

Answer 8

acceptance

Question 9

the seller of the goods is both the drawer and the payee

Answer 9

trade acceptance

Question 10

when a draft orders the buyers bank to pay it is a

Answer 10

banker’s acceptance

Question 11

common type of draft where the writer is the drawer the bank is the drawee and the person whom the check is made payable is the payee

Answer 11

check

Question 12

is a written promise made by one person to pay another

Answer 12

promissory note

Question 13

what does it mean that promissory notes are commonly assigned

Answer 13

the assignment of a note does not affect the makers obligation to pay

Question 14

type of note issued when one party deposits funds with a bank and the bank promises to repay the funds with interest on a certain date

Answer 14

certificate of deposit