1. The following are essential requisites of a negotiable promissory note except a.

must be written and signed by the drawer b. must contain an unconditional promise to pay a sum certain in money c. must be payable upon fixed determinable future time. d. must be payable to order or bearer 2. Which of the following is not an essential element of a bill of exchange? a. must be written and signed by the drawee b. must contain an unconditional promise to pay a sum certain in money c. must be payable to order or bearer d. drawee must be named therein 3. The following are negotiable except a. Pay to bearer Jose Cruz P 10,000 upon demand, signed by A and addressed to B b. Pay to Jose Cruz or bearer P 10,000 upon demand, signed by A and addressed to B c. I oblige myself to pay Pedro Reyes or order P 3,000 ten days after day signed by M as maker. d. Good to L or order P 5,000 July 1, 2009 signed by M as maker 4. Which of the following is negotiable? a. I promise to pay Jose Cruz or order P 10,000 or deliver 1 cow 20 days after date at the option of the holder signed by M as maker b. Pay to Pedro Reyes or bearer P 10,000 or deliver 1 cow on 4-4-10 at the option of the drawee, signed by A and addressed to B c. Pay to Pedro C. Cruz or order P 5,000 out of fund I deposited with you signed by A and addressed to B d. I promise to pay K. KHO or order P 10,000 in 5 installments, first installment August 1, 2009 and every month thereafter, signed by M as maker 5. The following are functions of negotiable instrument; except: a. used as substitute for money b. medium of credit transactions c. medium of exchange for commercial transactions d. none of them. 6. Which of the following is no an incident in the life of negotiable instrument? a, Issue b. notice of dishonor c. Preparation d. Negotiation

7. Which of the following is negotiable? a. Postal Money order b. Certificate of stock c. Treasury warranty d. None of them 8. A promissory note is payable to bearer when: a. It is payable to a person named therein or bearer b. the only indorsement is blank c. the name of payee does not support to be the name of a person d. all of the above 9. The following are considered negotiation except a. issue b. indorsement plus delivery c. delivery d. none of them 10. This indorsement constitutes the indorser as a mere assignor of the title of the instrument: a. Special b. Blank c. qualified d. restrictive

11. The following are requisites in order that a person can be considered a holder in due course; except a. that the instrument is complete and regular upon its face. b. the instrument is not yet overdue or no notice of dishonor c. holder for value and in good faith d. none of them. 12. Which of the following is not false? a. a holder for value is not necessarily a holder in due course b. only person whose signature appear in the instrument can be held liable therein c. forgery is both real and personal defense d. an accommodation party is liable only to a holder in due course 13. Real defenses are those that attached to the instrument itself and can be set up even against holder in due course. Which of the following is not considered real defense?

a. fraud in factum b. forgery

c. absence or failure of consideration d. minority

14. The existence of the payee and his then capacity to indorse is a warranty of: a. the maker b. acceptor c. drawer d. all of them

15. Which of the following is not a warranty of a qualified indorser? a. the instrument is genuine b. he has a good title c. prior parties have capacity to contact d. instrument is valid and subsisting 16. Notice of dishonor is not required to be given by a drawer when: a. The drawer and the drawee are the same person b. the drawee has countermanded payment c. the drawee is fictitious d. all of the above 17. Which of the following is not considered material alternation a. changing the date b. changing the amount c. changing the relation of the parties d. none of them 18. A negotiable instrument is discharged by: a. payment in due course by or on behalf of the party primarily liable b. payment in due course by the party accommodated c. intentional cancellation thereof by the holder d. none of them 19. Who of the following is party with primary liability? a. Maker b. Indorser c. drawer d. person negotiating by mere delivery

20. A check is not presented for payment within a reasonable length of time after issue is called a. certified b. Stale c. memorandum d. crossed

21. Signification by the drawee of his assent to comply with the order of the drawer is: a. Indorsement c acceptance b. delivery d. presentment for acceptance 22. Presentment for acceptance is required when a. the bill is payable after sight b. the bill requires it c. the bill is drawn payable elsewhere than the residence of the drawee d. all of them 23. Protest is required when this bill is dishonored: a. domestic/local b. foreign c. trade acceptance d. all of the above

24. The following are promissory notes except: a. due bill b. bond 25.Which of the following is false? a. the acceptor is primarily liable b. the drawer is secondarily liable c. the issue is not negotiation d. when the drawer and drawee are the same person the holder consider the bill was a note 26. I promise to pay Jose Reyes or order P 10,000 ten days after the date signed by M as maker. The note is undated. Which of the following is correct? a. the note is non negotiable b. the payee can require payment 10 days after issue c. the payee can require payment at any time d. the payee cannot negotiate the note 27. The negotiable promissory note signed by M as maker for P 10,000 is payable to Jose Cruz or bearer on May 10, 2009. M however issued the note to the payee May 15, 2009. In this case: a. The instrument is considered non-negotiable because the date of issue is later than the date of payment. b. Cruz can ask for payment at anytime c. Cruz can require payments only on May 15, 2009 d. Cruz cannot negotiate the note c. certificate of deposit d. none of them

28. Pay to Maria or order P 20,000 upon demand, signed by A as drawer and addressed to B. Maria negotiated the bill to C, C to D, E stole the bill from D and indorsed it to F by forging the signature of D. F in turn indorsed the bill to G & G to H. Which of the following is false? a. all indorsers prior to the forgery are discharged b. the drawer is liable to H c. F is liable to H d. Forgery is real defense 29. M is the maker of a note payable to J. Cruz or order for P 5,000 due July 30, 2009. Cruz borrowed P 2,000 from C payable July 31, 2009 and pledged the note by indorsing it to C. Which of the following is correct? a. a promissory note cannot be pledged without the consent of the maker b. On July 30, 2009 C can collect from M only P 2,000 c. on July 30, 2009 C can collect from M P 5,000 d. partial indorsement is allowed 30. A is the drawer of a bill addressed to B, payable to C or order 10 days after acceptance for P 8,000. C negotiated the bill to D, to E and E to F. The bill was accepted by B when presented by F. If the signature of A is forge, which of the following is false? a. B is required to pay F even if the signature of A is a forgery b. B is not required to pay F since he has the defense of forgery c. Forgery is considered a real defense d. If B dishonors the bill by non-payment F may give to any indorse 31. M is the maker of a note, payable to C or order for P 10,000. C negotiated the note to D, D to E, E to F, F to G and G to H. M dishonored the note when presented by H for payment. H gave notice of dishonor to F. Which of the following is true. a. all indorsers prior to F are discharged b. only G is discharged c. H is required to notify M d. F in turn can give notice to G 32. Pay to Pedro Reyes or order P 20,000 ten days after sight SIGNED By A drawer as agent of B To: B

Pedro Reyes negotiated the bill to C, C to D and D to E. B dishonored the bill by non payment. E gave notice of dishonor to all prior parties except B. Which of the following is not correct? a. The drawer is not liable to E b. The drawer is liable to E since he was duly notified of the dishonor c. if D paid E , C becomes liable to D d. this bill maybe considered as a note 33. M signed a promissory note payable to C or order for P 5,000 ten days after date. C indorsed the note to D, D to E and E to F. F, without authority from the prior parties, altered the amount to P 15,000 then indorsed the note to G. a. the unauthorized alteration renders the note void b. G cannot require M to pay anything c. G can require M to pay only P 5,000 if G is a holder in due course d. G can require M to pay P 25,000 if G is a holder in due course 34. Drawer A addressed a bill to B for P 20,000 payable to C or order 20 days after acceptance. B made a conditional acceptance in this case: a. the bill becomes non-negotiable b. it is still negotiable notwithstanding the conditional acceptance c. the holder cannot refuse to take a conditional acceptance d. B is considered a constructive acceptor 35.M is the maker of a note for P 30,000 payable to C or bearer. C negotiated the note to D, D to E, E to F and F to M. Which is correct? a. the note is discharged b. the noted is not discharged since there is no payment c. M cannot re-issued the note d. The indorsers are not dischaged 36. Drawer A addressed a bill to B payable to C or bearer for P 60,000 upon demand. C negotiated the note to D, D to E, E to F and F to G. Upon proper presentment, B paid the bill. Which of the following is true? a. the bill is discharged b. persons secondarily liable are likewise discharged c.the bill is not required to be presented for acceptance d. all of the above

Suggested Answers 1. a 2. a 3. a 4. a 5.d 6.d 7. d 8. d 9d 10. c 11. d 12. a 13. c 14. d 15. d 16. d 17. d 18. d 19. a 20. b 21. c 22. d 23. b 24. d 25. c 26. b 27. b 28. b 29. c 30. b 31. c 32. b 33. c 34. b 35. a