Bills of Exchange Quiz
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Questions and Answers

What is a bill of exchange?

  • A form of promissory note used only in banking transactions
  • A negotiable instrument that serves as a guarantee of payment
  • A written order to pay a specified sum of money to a designated person (correct)
  • A type of currency used in international trade

    • What is the role of the drawer in a bill of exchange?

  • The person who orders the payment (correct)
  • The person who receives the payment
  • The person who witnesses the payment
  • The person who guarantees the payment

    • What is the function of a bill of exchange?

  • Functions as a receipt for goods or services
  • Serves as a legal contract between two parties
  • Facilitates trade by providing a method of payment (correct)
  • Acts as a form of insurance against non-payment

    • In a bill of exchange, who is the drawee?

    <p>The party to whom the order to pay is addressed</p> Signup and view all the answers

    What is the significance of the term 'acceptance' in a bill of exchange?

    <p>It signifies the drawee's agreement to pay the bill as per its terms</p> Signup and view all the answers

    What is the function of the endorser in a bill of exchange?

    <p>Guaranteeing the payment of the bill</p> Signup and view all the answers

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