- CFA Exams
- CFA Exam: Level I 2021
- Study Session 17. Alternative Investments
- Reading 50. Introduction to Alternative Investments
- Subject 1. Alternative investments
CFA Practice Question
Which is false? Typically the general partner in a partnership:
B. bears limited liability.
C. receives a management fee.
A. is an unlimited liability company.
B. bears limited 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 7
| 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. |
| greenasha | i thought answer was B, because GP bears unlimited liability |
| cfakhubi | answer of option B also looks correct, because the general partner bears an unlimited liability in the partnership and it says it bears a limited liability which is wrong. |
| 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 |