SIE Exam: Understanding Products and Their Risks Practice Test 7

A. The ability to sell ownership units of DPP products is like selling a stock on a registered exchange.

B. The issuer of a DPP redeems the ownership units within two years of issue, or earlier, if an earlier date is specified when the units are issued.

C. DPP products are traded the NYSE and on over-the-counter markets.

D. Though DPP products are not traded on national exchanges, in some cases another purchaser may be found.

A. Securities Act of 1933

B. Securities Exchange Act of 1934

C. Investment Company Act of 1940

D. Investment Advisers Act of 1940

A. Real estate investment trust

B. Subchapter S corporation

C. Internal Revenue Code 401 and 403(a) tax qualified pension and profit sharing plan

D. Internal Revenue Code 403(b) tax sheltered annuity

A. The owners are taxed at a lower rate, in consideration of the DPP income already being taxed.

B. The owners are taxed on profits reported as passive income, but the DPP is not taxed.

C. The owners are taxed on profits reported as actively participating, but the DPP is not taxed.

D. The DPP is taxed, and the owner receives tax-exempt dividend income from the DPP.

A. Subchapter C corporation

B. Subchapter S corporation

C. Limited partnership

D. Limited liability company

A. If listed, it would trade on any national exchange.

B. They may only be traded with other limited partners in the same partnership.

C. They are only traded after market value is determined at the close of trading each day.

D. Investors may find broker-dealers who stay aware of such investments and receive compensation for doing so.

A. Board of Directors

B. Limited partners having more than ten percent of ownership

C. All limited partners

D. General partner

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.

A. The GP decides how much capital each limited partner will contribute.

B. The GP submits the annual budget to a board of directors for approval.

C. The GP operates the program with a fiduciary relationship to limited partners.

D. The GP makes all decisions regarding the partnership.

A. The limited partnership owns all assets.

B. The general partner would not guarantee a loan.

C. The general partner would not receive compensation for services, other than profit distributions, as the limited partners receive.

D. Limited partners may guarantee a loan.