Chapter 7 Practice Question Answers
1. Answer: C. Secured lenders are always paid first, and general partners are always paid last.
2. Answer: A. An underwriter markets the DPP; a partnership manager makes decisions; a property manager manages properties. All of these, as well as syndicator, are roles of the general partner.
3. Answer: B. The general partner manages the DPP on a daily basis; the limited partners may invest in businesses that compete with the DPP, sue to remove the general partner, and vote to dissolve the DPP.
4. Answer: B. Depreciation reduces an asset’s book value, so accelerated depreciation reduces that book value more quickly than straight-line depreciation.
5. Answer: A. Of those listed, oil and gas exploration is the most risky and likely would lead to the most losses that could be netted against passive income for tax purposes.
6. Answer: D. An investor in a DPP needs to meet suitability standards set by the DPP and needs to be able to withstand losses, particularly i