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.

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Definitions:

Risk of Obsolescence

The risk that a product, service, or technology will become outdated or no longer useful, often due to advancements in technology.

Debt to Stockholders' Equity Ratio

A financial ratio that measures the proportion of a company's total debt to its shareholders' equity, indicating the financial leverage of the company.

Current Ratio

The Current Ratio is a measure of liquidity that assesses a company's capacity to cover short-term liabilities or debts due within the next year.

Capital Lease

A lease agreement that is treated like an asset purchase for accounting purposes because it meets certain criteria, leading to the lessee recognizing the leased asset on their balance sheet.