Elmore Purchases Goods from Grady, and Elmore Executes and Delivers

Multiple Choice

Elmore purchases goods from Grady, and Elmore executes and delivers a negotiable note to Grady for $1,200, payable to Grady's order in 30 days. Two weeks later, Grady negotiates the note to McDaniel. Which of the following is true?

A) McDaniel is required to notify Elmore that he acquired the note.
B) If the goods are defective, Elmore's defense will necessarily be available against McDaniel.
C) Whether Elmore's defense is available against McDaniel will depend on whether McDaniel acquired the note in good faith and for value, had no knowledge of the defense, and took the note without reason to question its authenticity.
D) McDaniel can acquire no greater rights than Grady had in the note.