High School

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Margo is in possession of a check issued to her by Felix. The check states, "Pay to the order of Margo." If Margo wishes to transfer the check to Pete to pay a debt she owes him, what is the correct method for Margo to transfer the check to Pete?

a) Cross out Felix's name, write Pete's name, and sign below.
b) Strike out her name, write Pete's name, and sign below.
c) Keep the check as it is and inform Pete.
d) Tear up the check and issue a new one to Pete.

Answer :

Final answer:

Margo should endorse the check on the back with "Pay to Pete" and sign her name to properly transfer the check to Pete.

Explanation:

The correct method for Margo to transfer the check to Pete is not to strike out her name or Felix's name, nor is it to tear up the check. Instead, Margo should endorse the check on the back by writing "Pay to Pete" and then sign her name below this endorsement. This is a standard procedure that confirms her desire to transfer the payment to Pete, effectively using the check to settle her debt with him. One can draw parallels to mechanisms in banking such as promissory notes and banknotes, as well as understanding the nature of negotiable instruments and the money supply.

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