Bob is angry at his company XYZ Corp. since his annual bonus was too small. Bob who has authority to sign checks on behalf of XYZ decides to get even by creating an employee, Steven Even. Bob writes a check to Steven on XYZ's checking account, signs it and then he indorses it with Steven's name and deposits it an account he has opened in Steven Even's name and the check clears. XYZ finds out and wants to hold the bank liable for paying the check since there was a forged indorsement. Which of the following is true?

1. The bank needs to pay because of the imposter rule. 2. The bank only needs to pay if the check was for more than $500. 3. The bank needs to pay because when there is a forged indorsement, the first person to take the instrument with the forged indorsement is liable. 4. The bank does not need to pay because of the fictitious payee rule.