Series 7 Exam Question 383: Answer and Explanation

Question: 383

Which of the following sequences reflects the priority of payments made when a limited partnership is liquidated?

I. Secured creditors

II. General creditors

III. Limited partners

IV. General partners

• A. I, II, III, IV
• B. IV, II, III, I
• C. IV, II, I, III
• D. I, IV, II, III

Correct Answer: A

Explanation:

A. This question is actually somewhat of a logic question, and I actually put the statements in order for you. Secured creditors (loans secured with collateral) are paid first, followed by general creditors (loans not secured with collateral), then limited partners (the main investors), and lastly, the general partners.