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Chapter 5 Flash Cards
STUDY GUIDE
39
Business
10th Grade
03/07/2007

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Cards

Term
Negotiable Instrument
Definition
a written order to pay a sum of money, either to a specified party or to the person who holds it. They include drafts, bills of exchange, and some promissory notes, and checks.
Term
What is an instrument?
Definition
In the broadest sense, almost any agreed upon medium of exchange could be considered a negotiable instrument.
In day-to-day banking, a negotiable instrument usually refers to checks, bills of exchange, and some types of promissory notes.
Term
Bearer Instrument
Definition
payable to the bearer, or it may be an instrument with highly specified terms.
Term
Check Number
Definition
the number of the check being written.
Term
Date
Definition
the date the check is written.
Term
Amount
Definition
spaces aloud for the amount of check to entered in both numbers and words.
Term
Payee
Definition
receiver of the funds.
Term
Signature
Definition
valid signature of the maker of the check.
Term
Memo
Definition
optional entry to note the checks purpose.
Term
Identification Numbers
Definition
show the check number, the bank routing number, and the account number.
Term
Draft
Definition
an order signed by one party that is addressed to another party directing the drawee to pay someone the amount indicated on the draft.
Term
Bill of Exchange
Definition
a negotiable and unconditional written order, such as a check, draft, or trade agreement, addressed by one party to another.
The receiver of the bill must pay the specified sum or deliver specified goods on demand or at a specified time.
Bills of Exchange are a common form of internationally negotiable instruments.
Term
Promissory Note
Definition
a written promise to pay at a fixed or determinable future time a sum of money to a specified individual.
Term
Elements of Negotiability
Definition
when you present a check to a bank for payment, the bank has to assure that the check meets certain legal requirement.
Term
Bank Endorsement
Definition
sometimes called an open endorsement, is the least secure of the four main types of endorsement.
Term
Restictive Endorsement
Definition
limits the use of the instrument to a means specified by the endorser. " for deposit only.
Term
Restrictive Endorsement
Definition
sometimes called a special endorsement, transfers the check to another.
Term
Qualified Endorsement
Definition
attempt to limit the liability of the endorser without limiting an instrument's further negotiability. "without recourse"
Term
Federal Reserve Act of 1913
Definition
also established the structure of our banking system, the Federal Reserve Act of 1913 also established the fundamental relationship between the Federal Reserve and banks, as well as among banks.
Term
Uniform Commercial Code of 1958
Definition
established a consistent code for commercial law transactions.
Term
Expedited Availability Act of 1987
Definition
Passed to combat an abuse of the check payment system practiced by a few banks.
Term
Charge Card
Definition
a consumer makes purchases but must pay the account in full at the end of the month.
A charge card must be paid off every month.
Term
Credit Cards
Definition
allow consumers to pay all or part of their bills each month and finance the unpaid balance.
Term
Cash Cards
Definition
are commonly used at an automated teller machine (ATM).
- Consumers can get cash, make transfers and deposits, or perform almost any other banking function at the machine by inserting the card and entering a personal identification number (PIN).
Term
Debit Cards
Definition
transfer money from a person's designated account to the account of the retailer.
Term
Smart Cards
Definition
are credit, debit, or other types of cards with embedded microchips.
Term
e-checks
Definition
a digitally guaranteed type of electronic check to be transmitted on the Internet.
Electronic Tokens - monetary system based on the exchange of digital money via computer.
Term
EFT (electronic funds transfer)
Definition
occur between banks, between banks and the federal reserve, between banks and the government, and between banks and consumers.
Term
Automated Clearing Houses (ACHs)
Definition
magnetic tapes exchange among banks read streams of data into computers, ideal for large volumes of smaller payments such as payrolls or recurring payments.
Term
Fedwire
Definition
funds transfer system run by the Federal Reserve, handles transfers for federal funds, interbank dealings, and securities transactions.
Term
A ________ is almost any agreed-upon medium of exchange.
Definition
instrument
Term
Drawee
Definition
The party on which an order for the payment of money is drawn.
Term
drafter
Definition
a writer of a draft
Term
Payee
Definition
One to whom money is paid
Term
Drawer
Definition
One that draws, especially one that draws an order for the payment of money.
Term
A _________ endorsement limits the use of the instrument to a means specified by the endorser.
Definition
restrictive
Term
A ___________ endorsement is an attempt to limit the liability of the endorser, without limiting an instruments further negotiability.
Definition
Qualified
Term
A ___________ endorsement is also called an Open endorsement. It is the least secure of all the types of endorsements and only requires the signature of the holder.
Definition
Blank
Term
A ___________ endorsement transfers the check to another qualified party.
Definition
Full
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