Question

Nick is investing $25,000 in a partnership with his sister and brother. nick does not want to be an active part of the partnership and can only afford to risk the $25,000 he is investing. his brother and sister agree to let him share a proportionate amount of the profits. nick is a(n) ________ in this partnership.

Answer 1

Nick is a LIMITED PARTNER in this partnership. A limited partner is one who contributed to the formation of a company in form of capital but who is not actively involved in the day to day running of the business and his liability in the business is limited to the extent of his investment.