Harry, Clyde, and Pete Carried on Business in Partnership as Hardware

question 34

True/False

Harry, Clyde, and Pete carried on business in partnership as hardware merchants. Clyde, who did most of the purchasing of stock for the partnership, would occasionally purchase (using his own money) an extra quantity of some items that could readily be sold to consumers. He would use the truck owned by the business on the weekends to travel to his cottage where he would sell the items to cottage owners in the area of his own cottage. Harry and Pete were unaware of Clyde's actions, as Clyde had not revealed his weekend business activity to either Harry or Pete. Harry and Pete are entitled to claim their share of the profits earned by Clyde from his weekend selling activity.

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Definitions:

Alpha Coefficient

A measure of the performance on a risk-adjusted basis, calculating how much a portfolio or investment has returned in comparison to the overall market or a benchmark index.

Beta Coefficient

An indicator of how much a stock's price fluctuates in comparison to the general market, representing its risk relative to the market norm.

Treynor-Black Model

A portfolio optimization model that blends passive and active management strategies to try to achieve excess returns with an acceptable level of risk.

Alpha Coefficient

A measure of the performance on a risk-adjusted basis of an investment portfolio, indicating excess return over the benchmark.