Betty Issues a Note Payable to the Order of John

question 106

Multiple Choice

Betty issues a note payable to the order of John for $2,000.John properly indorses the note,but raises the amount to $20,000,and negotiates it to Mary.On the due date,Mary attempts to collect $20,000 from Betty.Betty refuses to pay.Assuming that Mary is a holder in due course,which parties can Mary recover from in a lawsuit?

• A) $20,000 from Betty, but nothing from anyone else
• B) $2,000 form Betty, but nothing from anyone else
• C) $2,000 from Betty, and $18,000 from John
• D) $20,000 from John, but nothing from anyone else
• E) nothing from anyone

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Definitions:

Principal Repaid

The portion of a loan payment that goes toward reducing the original loan amount, as opposed to the portion that goes toward paying interest.

Interest Paid

The amount paid over a period for borrowing money, typically expressed as an annual percentage rate.

Loan

A sum of money that is borrowed and is expected to be paid back with interest.

Asset's Market Value

The current price at which an asset can be bought or sold in a marketplace, reflecting the value assigned to it by the market participants.