Transfers of Negotiable Instruments and Warranties of Parties:
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1. If a payee's name is misspelled, she may indorse the wrong name, the correct name, or both.
2. Bearer paper can be negotiated by delivery without indorsement.
3. An instrument may be transferred by negotiation or by assignment.
4. When a negotiable instrument is transferred by negotiation, the transferee is recognized as the holder of the instrument.
5. Order paper can be turned into bearer paper by the holder's blank endorsement.
6. A special endorsement consists of the signature of the indorser and the words identifying the person to whom the indorser makes the instrument payable.
7. Order paper is negotiated by indorsement of the holder and delivery.
8. A blank endorsement indicates the person to whom the instrument is to be paid-that is, the transferee.
9. An endorsement "Pay to Donald Hames, Cathy Dukes" is not valid as an endorsement because it does not contain the words "order" or "bearer."
10. A restrictive indorsement specifies the purpose of the indorsement or the use to be made of the paper.
11. In a(n) _____________ the transferee has only those rights that were possessed by the transferor of the note when a transfer of an instrument is made.
d. a restrictive indorsement.
12. When a negotiable instrument is transferred by negotiation, the transferee is known as the ____________ of the paper.
13. If an assignment of an instrument takes place, the assignee:
a. has greater rights than the assignor.
b. has the same rights as the assignor.
c. is in possession of a negotiable instrument.
d. is in possession of a nonnegotiable instrument.
14. Negotiation of order paper requires:
a. delivery only.
b. indorsement only.
c. both indorsement and delivery.
d. neither indorsement nor delivery.
15. If a negotiable order instrument is transferred to another party without an endorsement, the instrument has been:
c. obtained by fraud, and it is therefore invalid.
d. obtained by fraud, but it may be ratified.
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