MCQ Bank

Mr.Akram steals a bearer check and gives it to Mr. Kahlid against his debt payment. Mr.Khalid fails to receive the payment due to stop payment of that stolen cheque. Who is holder in due course in this case?

A) All of the given options
B) Bank
C) Mr.Khalid
D) Mr.Akram

AI Explanation

Mr. Khalid received the bearer check in good faith for a preexisting debt without knowledge of the theft, qualifying him as a holder in due course under negotiable instrument law.

BNK601 Final Term AI Solved

_______________________ is the maker of bill of exchange in a trade agreement.

A) Principal
B) Exporter
C) Importer
D) None of the available options

AI Explanation

In international trade transactions, the exporter typically draws the bill of exchange upon the importer, making the exporter the maker or drawer of the instrument.

BNK601 Final Term AI Solved

Full endorsement is also called ____________________________.

A) Special endorsement
B) Blank endorsement
C) Restrictive endorsement
D) Partial endorsement

AI Explanation

A full endorsement—where the endorser specifies the person to whom or to whose order the instrument is to be payable—is also known as a special endorsement.

BNK601 Final Term AI Solved

All of the following are examples of Quasi Negotiable Instruments, under the Negotiable Instrument Act, 1881, EXCEPT:

A) Dividend Warrants
B) Bearer Debentures
C) Dividend Warrants
D) Banker’s Cheque

AI Explanation

Dividend warrants (listed twice in the choices as options A and C) are widely recognized as quasi-negotiable instruments along with bearer debentures and banker's cheques, making them standard examples.

BNK601 Final Term AI Solved

Which one of the followings is not considered as signature by the maker of a promissory note?

A) Lithographed signature
B) Name written with pencil
C) None of the given options
D) Rubber stamp

AI Explanation

Signatures by a maker can legally take various forms including rubber stamps, pencil, or lithographed impressions as long as they are intended to authenticate the document.

BNK601 Final Term AI Solved

Which one of the following is not the party of a bill of exchange?

A) Drawee
B) Drawer
C) None of the given options
D) Payee

AI Explanation

The three primary parties to a bill of exchange are the drawer, drawee, and payee. Since all listed choices are valid parties, none of the given options correctly identifies a non-party.

BNK601 Final Term AI Solved

The potential risk of loss associated with the bank’s trading account portfolios is called _____________________.

A) None of the given options
B) Equity and security price risk
C) Foreign Exchange rate risk
D) Interest rate risk

AI Explanation

The risk associated with a bank's overall trading account portfolios—covering fluctuations in market prices across equities, commodities, interest rates, and foreign exchange—is formally known as market risk or price risk.

BNK601 Final Term AI Solved

Blank endorsement is also called _____________________.

A) Partial endorsement
B) General endorsement
C) Full endorsement
D) Restrictive endorsement

AI Explanation

A blank endorsement, where the endorser merely signs their name without specifying a payee, makes the instrument payable to bearer and is also referred to as a general endorsement.

BNK601 Final Term AI Solved

Bill of exchange is issued by __________________________

A) Agent
B) Creditor
C) Principal
D) Debtor

AI Explanation

A bill of exchange is drawn by the creditor (the drawer) upon the debtor, ordering them to pay a specific sum of money to a designated payee.

BNK601 Final Term AI Solved

An endorsement is said to be restrictive endorsement under which of the following condition?

A) If the endorser signs his name only
B) If the endorser adds a direction to pay the amount mentioned in the instrument to, or to the order of, a specified person
C) If the endorser purports to transfer to the endorsee only a part of the amount payable
D) If the endorser restricts or excludes the right to further negotiate the instrument

AI Explanation

A restrictive endorsement is one that explicitly restricts or completely excludes the right of the endorsee to further negotiate or transfer the instrument.

BNK601 Final Term AI Solved

Q10

In a bill of exchange the maker is the _______________________________.

A) Principal debtor
B) Creditor
C) All of the given options
D) Surety

AI Explanation

In a bill of exchange, the maker is the drawer, who is typically the creditor owed money by the drawee.

BNK601 Final Term AI Solved

Q11

Mr.Ahmad directs Mr.Ali to pay Rs: 100,000 to Mr.Tahir on 1st of July 2021. Who can be the endorser in this case?

A) Mr.Ali
B) Mr.Ahmad
C) Mr.Tahir
D) None of the given options

AI Explanation

Mr. Tahir is the payee of the instrument and becomes the holder, meaning he has the right to endorse the instrument to a third party.