Choice "D" is correct. One may be an HDC only of a negotiable instrument. UCC 3-302
Choice "b" is incorrect. One can be an HDC on a negotiable note payable to order; it need not be payable to bearer.
Choice "c" is incorrect. One will be an HDC if he is a holder who takes the instrument for value, in good faith, and without notice that the instrument is overdue or has been dishonored or of any defenses on or claims to the instrument. There is no requirement that all prior holders be HDCs. UCC 3-302
Choice "a" is incorrect. Transferees can be HDCs. The status is not limited to the payee of the note. Indeed, the payee generally cannot be an HDC.
