On the back of a check "payable to Demos," Demos signs her name and negotiates the item to Ethos. To most effectively avoid a risk of loss from a theft of the check, Ethos should
A)immediately indorse the check in blank.
B)make a copy of the check and place it in a secure location.
C)write, above Demos' signature, "Pay to Ethos."
D)indorse the check "without recourse."

Question

Quizplus · Accepted Answer

Writing "Pay to Ethos" above Demos' signature and then endorsing it makes the check a special endorsement, which means it can only be further negotiated by Ethos. This reduces the risk of loss from theft since the check is now specifically payable to Ethos, making it harder for a thief to cash or deposit it without Ethos' endorsement.

On the Back of a Check "Payable to Demos," Demos