Series 7: Chapter 7 Practice Questions

Chapter 7 Practice Questions

1. 1. If a DPP needs to be liquidated, in what order are debts paid off?
2. A. Secured lenders, limited partners, general partner(s), other creditors
3. B. Limited partners, secured lenders, other creditors, general partner(s)
4. C. Secured lenders, other creditors, limited partners, general partner(s)
5. D. Limited partners, general partner(s), secured lenders, other creditors
6. 2. Pick the correct role of the syndicator:
7. A. Assembles the partnership and files the appropriate documentation with the state
8. B. Markets the DPP to potential investors
9. C. Makes investment and other business decisions
10. D. Manages the properties a real estate DPP purchases
11. 3. What is true under partnership democracy?
12. I. The limited partners and general partner have equal votes in day-to-day management decisions for the DPP.
13. II. The limited partners may invest in businesses that compete with the DPP.
14. III. The limited partners may sue to remove the general partner.
15. IV. The limited partners may not vote to dissolve the DPP.
16. A. I and II 
17. B. II and III
18. C. III and IV
19. D. I and IV
20. 4. Accelerated depreciation:
21. A. Makes an asset’s book value decline more slowly than it would under straight-line depreciation
22. B. Makes an asset’s book value decline faster than it would under straight-line depreciation
23. C. Makes the useful life of a DPP’s asset shorter than under straight-line depreciation
24. D. Makes the useful life of a DPP’s asset longer than under straight-line depreciation
25. 5. If an investor believes she will have a large amount of passive income over the next couple of years, which type of DPP of those listed below would be the most reasonable investment?
26. A. Oil and gas exploration
27. B. Purchase of an unfinished condominium development
28. C. Equipment leasing
29. D. Commercial real estate leasing
30. 6. To invest in a direct participation program, an investor needs: