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Chapter 29TRANSFERS OF NEGOTIABLE INSTRUMENTS AND WAR- RANTIES OF PARTIES TRUE/FALSE 1. An instrument may be transferred by negotiation or by assignment. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 2. When a negotiable instrument is assigned, the transferee has the rights of the transferor. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 3. When a negotiable instrument is transferred by negotiation, the transferee is recognized as the holder of the instrument. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 4. An instrument that originally was bearer paper always remains bearer paper. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 5. The order or bearer character of a paper is determined as of the time when the negotiation is about to take place. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 6. An order paper is negotiated by the endorsement of the holder and delivery. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 7. If an instrument is drawn in favor of an agent, it may be negotiated by either the agent or the agent's principal. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 8. Order paper cannot be negotiated or assigned to another without endorsement. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 9. Endorsements may be classified in terms of whether the indorser has added any words to the endorse- ment and what those words are. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 10. A blank endorsement indicates the person to whom the instrument is to be paid-that is, the transferee. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 11. A person who acquires the instrument on which the last endorsement is blank becomes the holder. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 12. Order paper can be turned into bearer paper by the holder's blank endorsement. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 13. When a special endorsement is made, the instrument becomes order paper and may be negotiated only by an endorsement and delivery. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 14. A special endorsement consists of the signature of the indorser and the words identifying the person to whom the indorser makes the instrument payable. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 15. An endorsement "Pay to Donald Hames, Cathy Dukes" is not valid as an endorsement because it does not contain the words "order" or "bearer." ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 16. A qualified endorsement qualifies the effect of a blank or special endorsement by disclaiming or des- troying the liability of the indorser to answer for the default of the maker or drawee. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 17. A restrictive endorsement specifies the purpose of the endorsement or the use to be made of the paper.... View Full Document

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