Which statement about cashier's checks is true?

Which statement about cashier's checks is true?

• A. They cannot be used for large payments
• B. They must be funded by a loan
• C. There is no dollar limit
• D. They expire after 90 days

Answer: (C)

Cashier's checks are bank-guaranteed instruments drawn on the bank’s own funds, signed by a bank official, which means they are backed by the bank. Because the bank stands behind the payment, there isn’t a built-in dollar limit dictating how large a cashier’s check can be, so it can be issued for substantial amounts as long as the bank has sufficient funds. They are not funded by a loan to the payer, and they do not have a universal expiration of 90 days—the bank honors them when presented. Hence, the statement that there is no dollar limit best reflects how cashier's checks work.

Cashier's checks are bank-guaranteed instruments drawn on the bank’s own funds, signed by a bank official, which means they are backed by the bank. Because the bank stands behind the payment, there isn’t a built-in dollar limit dictating how large a cashier’s check can be, so it can be issued for substantial amounts as long as the bank has sufficient funds. They are not funded by a loan to the payer, and they do not have a universal expiration of 90 days—the bank honors them when presented. Hence, the statement that there is no dollar limit best reflects how cashier's checks work.