Merchantable quality of goods refers to the standard and condition of goods that are suitable for sale in the market. It ensures that the goods meet certain criteria in terms of their quality, fitness for purpose, and ability to be sold at their full value. In this context, the correct answer is option 'D' - all of these.

Explanation:
1. Free from latent defects:
Merchantable quality requires that goods are free from any hidden or latent defects that may affect their performance or value. Latent defects are defects that are not immediately apparent and may only be discovered after the goods have been used for some time. Merchantable quality ensures that the goods do not have any such defects and are fit for use as intended.

2. Marketable at their full value:
Merchantable quality also means that the goods are marketable at their full value. This implies that the goods are in a condition that allows them to be sold in the market without any significant reduction in their value. The goods should be in a state that is desirable and acceptable to potential buyers, ensuring that they can be sold at their expected price.

3. Fit for the purpose:
Merchantable quality further requires that the goods can be used for the purpose for which they are bought by prudent persons. This means that the goods should be suitable for their intended use and fulfill the expectations of a reasonable buyer. Prudent persons refer to individuals who exercise reasonable care and judgment when purchasing goods.

When all of these criteria are met, the goods are considered to have merchantable quality. This ensures that buyers can have confidence in the quality and value of the goods they purchase. It also provides legal protection to consumers against substandard or defective products.

In conclusion, merchantable quality of goods encompasses the absence of latent defects, marketability at their full value, and suitability for their intended purpose. These criteria ensure that goods meet certain standards of quality and can be sold in the market without any significant issues.