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

must be written and signed

by the drawer b. must contain an unconditional promise to pay a sum certain in moneyc. 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 moneyc. must be payable to order or bearer d. drawee must
be named therein3. The following are negotiable excepta. “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 Bc. “I oblige myself to pay Pedro Reyes or order P 3,000 ten days after day signed by M
asmaker.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
atthe 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 thedrawee”, signed by A and addressed to Bc. “Pay to Pedro C. Cruz or order P
5,000 out of fund I deposited with you” signed by Aand addressed to Bd. I promise to pay K. KHO or order
P 10,000 in 5 installments, first installment August1, 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 transactionsc. medium of exchange for commercial transactionsd. none of them.6. Which of
the following is no an incident in the life of negotiable
instrument?a , I s s u
e c . P r e p
a r a t i o n b. notice of
dishonord. Negotiation
7. Which of the following is negotiable?a. Postal Money order b. Certificate of stock c. Treasury warrantyd.
None of them8. 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 persond.
all of the above9. The following are considered negotiation excepta. issue b. indorsement plus deliveryc.
deliveryd. none of them1 0 . T h i s i n d o r s e m e n t c o n s t i t u t e s t h e i n d o r s e r a s a m e r e a s s i g n o r
of the title of
t h e instrument:a . S p e c i a
l c . q u a l i f
i e d b. Blankd. restrictive11. The following are requisites in order that a person
can be considered a holder in duecourse; excepta. 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 faithd. 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 thereinc. forgery is both
real and personal defensed. an accommodation party is liable only to a holder in due course13. Real
defenses are those that attached to the instrument itself and can be set up evenagainst holder in
due course. Which of the following is not considered real defense?

a . f r a u d i n f a c t u m c . a b
s e n c e o r f a i l u r e o f c o n
s i d e r a t i o n b. forgeryd. minority14. The existence of the payee and his
then capacity to indorse is a warranty
of:a . t h e m
a k e r c . d
r a w e r b. acceptord. all of them15.
Which of the following is not a warranty of a qualified indorser?a. the instrument is genuine b. he has a good
titlec. prior parties have capacity to contactd. instrument is valid and subsisting16. 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 paymentc. the drawee is fictitiousd. all of the above17. Which of the following is
not considered material alternationa. changing the date b. changing the amountc. changing the relation of
the partiesd. none of them18. 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 accommodatedc. intentional
cancellation thereof by the holder d. none of them19. Who of the following is party with primary
liability?a . M a k e
r c . d r a
w e r b. Indorserd. person negotiating by mere delivery20.
A check is not presented for payment within a reasonable length of time after issue
iscalleda . c e r t i f i e
d c . m e m o r a n d
u m b. Staled. crossed

21. Signification by the drawee of his assent to comply with the order of the drawer
is:a . I n d o r s e m e n t
c a c c e p t a n c e b. deliveryd.
presentment for acceptance22. Presentment for acceptance is required whena. the bill is payable after
sight b. the bill requires itc. the bill is drawn payable elsewhere than the residence of the draweed. all of
them23. Protest is required when this bill is
dishonored:a . d o m e s t i c / l o c a l c
. t r a d e a c c e p t a n c e b. foreignd.
all of the above24. The following are promissory notes
except:a . d u e b i l l c . c
e r t i f i c a t e o f d e
p o s i t b. bondd. none of them25.Which of the following is false?a. the acceptor is
primarily liable b. the drawer is secondarily liablec. the issue is not negotiationd. when the drawer and
drawee are the same person the holder consider the bill was anote26. I promise to pay Jose Reyes
or order P 10,000 ten days after the date signed by M asmaker. 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 issuec. the payee can
require payment at any timed. the payee cannot negotiate the note27. The negotiable promissory note signed
by M as maker for P 10,000 is payable to JoseCruz 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 thedate of payment. b. Cruz can ask for payment at anytimec. Cruz can require
payments only on May 15, 2009d. Cruz cannot negotiate the note

28. “Pay to Maria or order P 20,000 upon demand”, signed by A as drawer and addressedto B. Maria
negotiated the bill to C, C to D, E stole the bill from D and indorsed it to F byf o r g i n g t h e s i g n a t u r e o f
D . F i n t u r n i n d o r s e d t h e b i l l t o G & G t o H . W h i c h o f t h e following is false?a. all indorsers
prior to the forgery are discharged b. the drawer is liable to Hc. F is liable to Hd. Forgery is real defense29.
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 indorsingit 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 2,000c. on July 30, 2009 C can collect from M P 5,000d. partial indorsement is
allowed3 0 . A i s t h e d r a w e r o f a b i l l a d d r e s s e d t o B , p a y a b l e t o C o r o r d e r 1 0
d a y s a f t e r 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 forgeryc.
Forgery is considered a real defensed. If B dishonors the bill by non-payment F may give to any indorse31. M
is the maker of a note, payable to C or order for P 10,000. C negotiated the note toD, 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 dischargedc. H is
required to notify Md. F in turn can give notice to G32. “ Pay to Pedro Reyes or order P 20,000 ten days after
sightSIGNEDBy A drawer as agent of BTo: 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 followingis 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 Dd. this bill maybe considered as a note33. M signed a promissory note payable to C
or order for P 5,000 ten days after date. Cindorsed 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 anythingc. G can require M to pay
only P 5,000 if G is a holder in due coursed. G can require M to pay P 25,000 if G is a holder in due
course3 4 . D r a w e r A a d d r e s s e d a b i l l t o B f o r P 2 0 , 0 0 0 p a y a b l e t o C o r o r d e r 2 0 d a y s
a f t e r acceptance. B made a conditional acceptance in this case:a. the bill becomes non-negotiable b. it is
still negotiable notwithstanding the conditional acceptancec. the holder cannot refuse to take a conditional
acceptanced. 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 toD, 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 paymentc. M cannot re-issued the noted. The indorsers are not
dischaged36. Drawer A addressed a bill to B payable to C or bearer for P 60,000 upon demand.
Cnegotiated 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 dischargedc.the bill is not
required to be presented for acceptanced. all of the above