A negotiatiable instrument is defined as one that gives the bearer the authority to withdraw funds. It is usually signed by the issuer to show it's authenticity.
Below are the responses on validity of the given scenarios:
a. Arnold gives a negotiable check payable to bearer to Betsy without indorsing it.
- It is a valid negotiation because a check payable to bearer gives the holder the right to withdraw even without indorsment
b. Golden indorses a promissory note payable to the order of Golden, “Pay to Chambers and Rambis, (signed) Golden.”
- It is a valid negotiation. However since it states it is to be payable to Chambers and Rambis, both will need to sign to make it negotiable
c. Porter lost a check payable to his order . Kersey found it and indorsed the back of the check as follows: “Pay to Drexler, (signed) Kersey.”
- Not valid for negotiation because Porter has to be the one that will sign the document not Kersey
d. Thomas indorsed a promissory note payable to the order of Thomas, (signed) Thomas,” and delivered it to Sally. Sally then wrote above Thomas’s signature, “Pay to Sally.”
- It is a valid negotiation. The holder of the promissory note (Sally) has the right to convert the instrument for payment to another person
d. Margarita issued to Poncho a promissory note payable to the order of Poncho. Poncho indorsed the note “Pay to Randy only, (signed) Poncho” and sold it to Randy. Randy then sold the note to Stephanie after indorsing it “Pay to Stephanie, (signed) Randy.”
- This is a valid negotiation. The initial order was Pay to Randy only. However Randy now sold the note to Stephanie stating - Pay to Stephanie, (signed) Randy.”
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