At 1aM, on the Sidewalk in Front of EZ Credit Corporation

question 44

Multiple Choice

At 1a.m., on the sidewalk in front of EZ Credit Corporation, which is closed, Frank buys a $500 promissory note for $50 from Greg. When presented with Frank's demand for payment, Diane, the maker of the note, could successfully claim that Frank​

• A) ​acquired the note with notice that it was overdue.
• B) ​did not acquire the instrument in good faith.
• C) ​did not give value for the instrument.
• D) ​none of the choices.

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Definitions:

CAPM

Capital asset pricing model. A statistical model of the investment world aimed at explaining how required returns are determined in financial markets and thereby how stock prices are set. Also see SML.

Risk-Free Interest

The return on investment with no risk of financial loss, typically associated with government bonds.

Firm's Beta

A measure of a stock's volatility in relation to the overall market, indicating the stock's risk level.

Transaction Costs

Expenses incurred when buying or selling goods and services, which can include fees, taxes, and other charges.