Choice "A" is correct. One will be an HDC only if the person 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. A refusal to pay is a dishonor. UCC 3-304Choice "d" is incorrect. Notice of the fact that a prior endorser was discharged does not prevent a person from becoming an HDC.
Choice "b" is incorrect. Notice that the instrument was collateral is not notice of a defense to an instrument and does not prevent HDC status.
Choice "c" is incorrect. Purchase at a discount does not prevent HDC status.
