- CFA Exams
- CFA Level I Exam
- Topic 8. Alternative Investments
- Learning Module 1. Alternative Investment Features, Methods, and Structures
- Subject 3. Investment and Compensation Structures
CFA Practice Question
Which is false? Typically the general partner in a partnership:
B. bears unlimited liability.
C. receives a management fee.
A. is an unlimited liability company.
B. bears unlimited liability.
C. receives a management fee.
Correct Answer: A
It is usually a limited liability company itself, but bears unlimited liability in the partnership.
User Contributed Comments 6
| User | Comment |
|---|---|
| nabada0419 | Isn't A correct? |
| myron | A is incorrect. The GP is usually a limited liability corporation. It theoretically bears unlimited liability for anything that might go wrong in the partnership. Very tricky. |
| zriddle | They could make their money from a performance based incentive, so they might not receive a management fee. |
| Unicorny | I don't quite understand why not A and C. Quote from the study notes "The general partner manages the business, assumes unlimited liability, and receives a management fee and an incentive fee" |
| joeclark | It is a negative question so pick for the false statement |
| 923029 | Does the GP need to be a 'natural person' ie human being? Or can the GP incorporate a 'business services' company and have it act as the GP ... so he is not wiped out personally in a failure? |