REFERENCE: Ref.14_05 Donald,Anne,and Todd Have the Following Capital Balances;$40,000,$50,000 and $30,000 Respectively.The

question 43

Multiple Choice

REFERENCE: Ref.14_05
Donald,Anne,and Todd have the following capital balances;$40,000,$50,000 and $30,000 respectively.The partners share profits and losses 20%,40%,and 40% respectively.
-Anne retires and is paid $80,000 based on the terms of the original partnership agreement.If the goodwill method is used,what is the capital of the remaining partners?

• A)Donald,$55,000;Todd,$60,000
• B)Donald,$40,000;Todd,$30,000
• C)Donald,$65,000;Todd,$55,000
• D)Donald,$15,000;Todd,$30,000

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Definitions:

Put-call Parity

A principle stating the relationship between the prices of European put and call options with the same strike price and expiration date.

American Put Values

The value of an American put option, which allows the holder to sell a specific asset at a predetermined price before the option expires.

Early Exercise

The action of exercising an option before its expiration date, typically to capture intrinsic value.

Protective Put

An investment strategy that involves buying a put option on a stock one owns, providing downside protection in case the stock's price decreases.