Edie Is the Payee of a Bearer Instrument-A Promissory Note

question 36

Multiple Choice

Edie is the payee of a bearer instrument-a promissory note in the amount of $1,000. Frank offers to irrigate Edie's ranch next week in ex?change for the note. Edie agrees and delivers the note to Frank. Frank is

• A) an HDC, because he promised to perform services at a future date.
• B) an HDC, because the transferor was the original payee on the note.
• C) not an HDC, because he did not acquire the instrument in good faith.
• D) not an HDC, because he did not yet give value for the instrument.

---

Definitions:

Payback Cutoff

The maximum allowable period for an investment to recoup its initial cost, beyond which it is not considered.

NPV

Net Present Value; a calculation used to determine the present value of a series of future cash flows, less the initial investment.

Conventional Cash Flow

A pattern of cash flow over time where an initial outlay is followed by a series of positive cash inflows.

Cash Flows

The entirety of cash and cash-equivalent assets being moved into and exiting a company.