Which Statement Best Describes Limited Partners

question 103

Multiple Choice

Which statement best describes limited partners?

• A) They risk their personal wealth in exchange for a controlling share of ownership.
• B) They agree to invest their money in the company for a limited time period.
• C) They have limited liability for the debts of their company as long as they do not actively participate in management.
• D) They cannot own more than 10 percent of the company's stock.

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Definitions:

Right to Buy

An option giving the holder the ability to purchase an asset at a predetermined price within a specified timeframe.

Employee Stock Options

A benefit offered by companies to their employees, giving them the right but not the obligation to buy the company's stock at a predetermined price during a specified period.

Intrinsic Value

The inherent, actual value of an asset, independent of its market value.

Underwater

A situation where the market value of an asset is less than the amount owed on it, often used in reference to mortgages.