Which of the following is true about a draft?
A)It is always a two-party transaction.
B)It is an unconditional written promise to pay.
C)It is a note created upon deposition of money.
D)It is a pay to order transaction.

Question

Quizplus · Accepted Answer

A draft is a pay to order transaction, meaning it is payable to a specific person or entity. A is incorrect because a draft can involve more than two parties (e.g. a bank may act as an intermediary). B is incorrect because a draft can include conditions or limitations. C is incorrect because a note is a different financial instrument from a draft.

Which of the Following Is True About a Draft