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Table 12-5
Jim and Joe are partners agreeing to share profits and losses in a 2:6 ratio, respectively. Business has been profitable and they have decided to admit Jewel to the partnership for a cash investment. The balances in Jim and Joe's capital accounts are presently $240,000 and $260,000, respectively.
-Refer to Table 12-5.If Jewel is given a 15% interest in the partnership in exchange for $100,000,the entry to record her investment includes a:
Maturity Risk
The risk that arises from the length of time until the principal amount of a fixed-income investment becomes due and payable, affecting the investment's exposure to interest rate changes.
Base Interest Rate
The minimum interest rate set by a central bank for lending to other banks, used as a benchmark for interest rates on loans and mortgages.
Pure Rate
The interest rate that reflects only the time value of money.
Liquidity Risk Premium
The additional return demanded by investors for holding assets that are not easily convertible into cash without a significant loss in value.
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