What does a restrictive endorsement do?

A restrictive endorsement indeed restricts further transfer of a check's ownership. This type of endorsement typically involves adding specific instructions on the back of the check, such as "For deposit only" followed by the endorser's signature. By doing this, the check can only be deposited into the account of the endorser, preventing anyone else from cashing or further negotiating the check. This is particularly useful in ensuring that the funds are secure and reach the intended recipient, thereby minimizing the risk of fraud or unauthorized access.

The other response options describe different scenarios: unrestricted transfer of ownership does not take place with a restrictive endorsement, nor is such an endorsement mandated for all business transactions. Likewise, while a restrictive endorsement does limit how a check can be handled, it does not explicitly prevent the check from being cashed entirely; it just ensures that it can only be deposited in a specified way.