Which One of the Following Statements Is Correct with Respect

question 121

Multiple Choice

Which one of the following statements is correct with respect to the liability of partners?

• A) When a partner enters into a partnership arrangement, he can only lose what he has invested in that partnership.
• B) If a third party is injured because of an activity carried on by the partnership, that third party can only go after the personal assets of a partner if the assets of the partnership are not enough to provide compensation and the damage was actually caused by the conduct of that partner.
• C) A general partner is responsible, independent of what he has invested, for any losses caused to outsiders through the partnership business if the assets of the partnership are not enough to cover the claim.
• D) If there are three equal partners in a partnership, an injured third party can only collect one third of the claim from any one partner.
• E) A partner can protect himself from any liability beyond his investment if one of the other partners specifically agrees in the partnership agreement to be responsible for all such liability.

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Definitions:

Asset Allocation

The allocation of investment portfolio across various asset classes, such as stocks, bonds, and cash, to achieve a specific investment goal.

Broad Asset Classes

Categories of assets, such as stocks, bonds, real estate, and commodities, that behave similarly in the marketplace and are subject to the same laws and regulations.

Safe Securities

Investment instruments deemed to have a lower risk of loss, often with lower potential returns as compared to riskier investments.

Valuation

The process of determining the current worth of an asset or a company, often used in investment analysis.