In the Context of Limited Partnerships, Which of the Following

question 10

Multiple Choice

In the context of limited partnerships, which of the following statements is true of limited partners?

• A) Their ultimate authority in the business often compels them to perform tasks or make decisions in areas where they lack expertise.
• B) They assume unlimited personal liability for debts incurred by the company.
• C) They are not only liable for their own mistakes but also for that of their partners.
• D) Their personal wealth is not at risk as long as they do not actively participate in managing the company.

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Definitions:

Present Value

The present-day value of a sum of money to be received in the future or a series of future cash flows, based on a certain return rate.

Cash Flow

A financial measurement that shows the net amount of cash and cash-equivalents being transferred into and out of a business over a specified period.

Annuity

A finite series of equal payments at equal intervals of time. In an ordinary annuity the payments occur at the ends of the time periods. In an annuity due, they occur at the beginnings.

Discounted Value

The present value of a future amount of money or a series of cash flows, adjusted for time value of money.