Asked by Melanie Hershock on Jun 05, 2024
Verified
Before Mehdi endorsed the check it was a[n] ________ instrument; and after he endorsed it, the check was a[n] ________ instrument.
A) Order; order
B) Order; transactional
C) Order; bearer
D) Transactional; bearer
E) Bearer; bearer
Order Instrument
A financial instrument that is payable to a specific person or their order, thus requiring endorsement for transfer.
Bearer Instrument
A negotiable financial instrument, such as a check or bond, that entitles the holder in possession to the rights of the instrument, with no need to prove ownership.
- Identify the distinction between order instruments and bearer instruments.
- Describe the significance of endorsements on the status of negotiable instruments.
Verified Answer
MP
Maharsh PatelJun 10, 2024
Final Answer :
C
Explanation :
Before Mehdi endorsed the check, it was an order instrument because it was payable to a specific person (Mehdi). After Mehdi endorsed the check by signing his name on the back without designating a new payee, it became a bearer instrument, meaning it could be cashed by whoever held it.
Learning Objectives
- Identify the distinction between order instruments and bearer instruments.
- Describe the significance of endorsements on the status of negotiable instruments.
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