SIE Understanding Products and Their Risks Question 68: Answer and Explanation

Question: 68

Which of the following is correct regarding the general partner in a direct participation program that is a real estate limited partnership?

• A. The GP may have no ownership interest.
• B. The GP may have no ownership interest until the entity has a profitable return for two consecutive years.
• C. The GP must invest at least one percent of the entity's capital.
• D. The GP must invest at least ten percent of the entity's capital.

Correct Answer: C

Explanation:

C: Choice C is correct because the general partner must contribute at least one percent of the DPP's capital. Choices A, B, and D are incorrect.