Rau obtains a loan from Security Funds and signs a note for the amount payable to the lender. Security Funds indorses the note and sells it to Tomas. With the intent to cancel Rau's obligation on the note, Tomas writes "Paid" across its face. This discharges the liability of

A) no one.
B) Rau only.
C) Rau and Security Funds.
D) Security Funds only.

Obligation

A legal or moral duty to do or not do something, often with legal implications if not fulfilled.

Indorses

Refers to the act of signing the back of a financial document, thus transferring rights or ownership.

Security Funds

Financial reserves set aside to cover potential losses or liabilities, often used in contexts such as investments, insurance, and real estate.