Three Joint Operators Are Involved in a Joint Operation That

question 26

Multiple Choice

Three joint operators are involved in a joint operation that manufactures mining equipment. At the beginning of the year the joint operation held $100 000 in cash. During the year, the joint operation paid wages of $40 000. Additionally, creditors amounting to $80 000 were paid and the joint operators contributed $30 000 cash each to the joint operation. The balance of cash held by the joint operation at the end of the year is:

• A) $10 000.
• B) $50 000.
• C) $70 000.
• D) $150 000.

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Definitions:

Reinvestment Rate Risk

The risk that cash flows from an investment will be reinvested at a lower interest rate than the original investment rate, affecting future returns.

Coupon Bond

A type of bond that pays the holder a fixed interest payment (coupon) at regular intervals until the maturity date, at which point the principal is repaid.

Maturity

The date on which a debt must be paid back in full or the final payment is due.

Price Sensitivity

The degree to which the price of a product or service affects consumers' purchasing decisions.