Why is a promissory note considered a negotiable instrument?

A promissory note is considered a negotiable instrument primarily because it allows the holder to transfer the right to collect the debt to another person. This transferability is a key characteristic of negotiable instruments, which enables them to be easily sold or transferred. When a promissory note is endorsed, the new holder gains the legal right to receive payment, making it a valuable tool in financial transactions.

The ability to transfer rights to the debt enhances liquidity, as it simplifies the process of assigning debts to third parties. This is crucial for financial markets because it allows for increased flexibility and efficiency in transactions.

In contrast, the other options provided do not align with the definition of a negotiable instrument. For instance, the requirement for multiple signatures, exclusivity to financial institutions, or necessitating court filings do not inherently contribute to the instrument's negotiable status. These aspects could complicate the transferability and usability of a promissory note rather than enhance its characteristics as a negotiable instrument.