If There Is a 20% Chance We Will Get a 16

question 8

Multiple Choice

If there is a 20% chance we will get a 16% return, a 30% chance of getting a 14% return, a 40% chance of getting a 12% return, and a 10% chance of getting an 8% return, what is the expected rate of return?

• A) 12%
• B) 13%
• C) 14%
• D) 15%

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Definitions:

Partnership Interest

An ownership share in a partnership that entitles the holder to a portion of the entity's profits and losses.

FMV

Fair Market Value, the price at which property would sell on the open market between a willing buyer and a willing seller.

Partnership Basis

The amount invested in a partnership by the partners, adjusted for additions, withdrawals, and the individual's share of partnership profits or losses.

Partnership Basis

Refers to an individual partner's investment in a partnership, used for determining the tax implications of the partnership's operations on the individual.