Which of the Following Statements Is Correct with Respect to Limited

question 169

Multiple Choice

Which of the following statements is correct with respect to limited partnerships?

• A) A limited partnership is created where all of the partners state in the partnership agreement that they will not be responsible for debts arising out of the partnership business and register as such with the government.
• B) A limited partner is totally protected and can lose no money.
• C) A limited partner can lose his status as a limited partner if he participates in the management of the business.
• D) There can be no limited partnerships in Canada. If limited liability is desired, a corporation must be created.
• E) There can be only one limited partner in any partnership, no matter how many partners are involved.

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Definitions:

Risk-free Rate

This is the theoretical rate of return of an investment with zero risk, typically represented by the yield on government securities.

Call Option

A financial agreement which permits the purchaser the option, though not the requirement, to purchase a specific asset like a stock, bond, commodity, or another type of asset at a predetermined price during a defined timeframe.

Exercise Price

The price at which the holder of an option can buy (call) or sell (put) the underlying security.

Protective Put

An investment strategy where an investor buys a put option for an asset they own to limit potential losses if the asset's price falls.