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:

Securities and Exchange Commission

A U.S. federal agency that oversees and enforces federal securities laws to protect investors and maintain fair, orderly, and efficient markets.

Insider Trading

Buying or selling a publicly-traded company's stock by someone who has non-public, material information about that stock.

Securities Exchange Act of 1934

A U.S. federal law that regulates the secondary trading of securities (stocks, bonds, and debentures) in the stock market.

Rule 10b-5

A regulation under the SEC that prohibits any act or omission resulting in fraud or deceit in connection with the purchase or sale of any security.