Chapter 23 Self-test questions

. Which of the following statements are correct? Please select all that apply.

A banknote is a thing in action.

A banknote is a thing in possession.

A banknote is negotiable.

A banknote is fungible.

. Which of the following statements is correct?

Where payment is 'on demand' the payer will be allowed a reasonable time to pay.

Delay in making a payment cannot be a breach of a condition.

Where payment is to be made 'in cash' this means the payer must tender banknotes.

A payee need not always accept payment in banknotes and coins.

. Which of the following statements is incorrect?

In relation to a current bank account the relationship between the bank and the customer is that of debtor and creditor.

When a payer pays a payee through a funds transfer no property passes between them.

Were it not for inter-bank settlement processes after a funds transfer from a customer of A Bank to a customer of B Bank A Bank would be better off and B Bank worse off than before.

Interbank settlement is normally effected by using Bank of England banknotes.

. CHAPS stands for ___ House Automated Payment System.

. Which of the following statements are incorrect? Please select all that apply.

CHAPS is a gross settlement system which means each transaction is settled separately.

BACS is a multilateral net settlement system which means each transaction is settled separately.

Multilateral net settlement necessarily offends the pari passu rule.

BACS ensures that the payee receives same day value.

. Is the following statement true or false? 'CHAPS is designed for low value high volume transactions.'

True

False

. Once the ___ acknowledgement message has been sent in the CHAPS system, the payee's bank must give same day value except in limited circumstances set out in the CHAPS rules.

. A payment is made to a payee through a funds transfer when…

The payee's bank has finished any checks it has to make.

The payer's bank account is debited.

The payee's bank unconditionally accepts the payee as its creditor in respect of the funds transferred.

The payee's account is credited.

. Where banks have accounts with one another they are said to be '___ banks'.

. Which of the following statements is correct?

A bank can reverse a credit to an account until the customer calls upon the funds.

A bank can reverse a credit to an account if it discovers that it will not be able to recover the money from the payer's bank.

A bank can reverse a credit to an account at any time up to 3:30pm on the day after the payer's bank has initiated the transfer.

A bank can reverse a credit to an account at any time if it suspects money laundering.

None of the options are correct

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