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Exam 20: Banking in the Digital Age

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Question 1

Multiple Choice

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Brendan signs a check "pay to the order of City College Bookstore" drawn on his account in Delta Bank to pay for his current semester's textbooks. The bookstore deposits the check in its account in Eagle Bank. Like most checks, this check is

A) a one-party instrument.
B) ​a non negotiable instrument.
C) ​a type of draft.
D) ​not a substitute for cash.

E) B) and D)
F) C) and D)

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Question 2

Multiple Choice

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On Monday, Ellery deposits in her account at Fiscal Bank a local check for $500. After 5:00 p.m. on Friday, from these funds, Ellery can withdraw no more than

A) ​$100.
B) ​$400.
C) ​$500.
D) ​$600.

E) C) and D)
F) All of the above

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Question 3

Multiple Choice

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Marta has a checking account with Neighbors Bank. Marta signs a check "payable to Olive" drawn on Marta's account. Neighbors Bank is​

Drew signs a check “pay to the order of Eastern State University” drawn on Drew’s account in Fidelity Bank to pay her tuition. Drew is

Ridgetop Bank creates a paper reproduction of customer Sophie's check with the statement "This is a legal copy of your check. You can use it in the same way you would use the original check." This is

The Uniform Commercial Code regulates checks.

A bank that pays a customer's check bearing a forged indorsement is obligated to recredit the customer's account.

When a bank pays a check on which the drawer's signature is forged, generally the customer suffers the loss.

Gillian writes a check to Harris as payment for a video game player but soon discovers the player is broken. She goes to the drawee bank and orally authorizes Ilene, a bank officer, to stop payment on the check. This order is valid for​

On an automated teller machine (ATM) belonging to USA Bank, Sven placed a card-skimming device to pull information from the magnetic strips of users' debit cards. The device then transmitted the stolen data to thieves who used it to gain access to, and empty, the bank accounts of the users, including Megan. Megan learned of the theft the next day and promptly notified USA. Is Megan entitled to a recredit of her account for the most of the loss due to the theft? Explain.

The Federal Reserve System acts as a clearinghouse where banks exchange checks.

O'Shea issues a check drawn on Prime Bank to Quality Equipment Supply to pay for a backhoe. Later, O'Shea discovers a defect in the backhoe and orders the bank to stop payment on the check. O'Shea does not renew the order, and the bank clears the check eight months later. The bank​

Smith & Jones Associates is a business customer of Town Bank. Under federal law, Smith & Jones cannot demand

A check is a special type of draft.

Gary writes a check drawn on Hilltop Bank for $400 "payable to Ivan" on May 1. Gary dies on May 3. Ivan presents the check to the bank on May 5. Unaware of Gary's death, the bank

Stored-value cards can be used to buy goods and services offered by the cards' issuer.

Jackie inserts a debit card issued by her bank into a machine and keys in her personal identification number. She is then able to withdraw $500 in cash. Jackie is using

Elmore pays First National Bank $1,000 plus a service fee to draw a check on itself made payable to Go Delivery Service. This is​

Smart cards carry and process security programming.

Daisy signs a check "pay to the order of Ewan" drawn on Daisy's account in Finance Bank. Graham forges Ewan's indorsement. Finance Bank pays the check. Most likely​