Ch. 9 Flashcards
Is income generated by a limited partnership taxed once or twice?
Once, and only at the partner level. The program itself is not a taxable entity.
What program generates no cash flow and is based on the speculation of land value appreciation?
Raw Land Program
In a limited partnership, which partner has unlimited personal liability and which has limited liability?
GPs have unlimited liability, LPs have limited liability
T/F: REITs are exempt from the registration requirements of the Securities Act of 1933.
False
Define: REIT
Real Estate Investment Trust
The ____ partner is in charge of management and decision making for the partnership.
General partner
A REIT could derive income from what different sources?
Interest, rent from properties and capital gains
What types of investments do PE and VC funds buy?
Privately held and start up companies
Is a hedge fund investment considered liquid?
No
May hedge funds sell stocks short and use margin?
Yes
T/F: Investors who purchase ETF shares must pay a sales charge
False; since they are exchange traded, you pay commissions
What amount of net income must a REIT distribute?
90%
_____ Drilling Programs drill in proven areas.
Developmental
T/F: Income Programs purchase already producing wells, but offer few intangible drilling costs.
True
What does it mean to say “a limited partnership is a pass-through investment”?
The results of the business venture (profits and losses) flow through directly to the investor
General Partners must contribute at least ____% of the capital.
1%
T/F: Limited Partners may be forced to invest more money into a partnership.
True; possible additional capital call
T/F: Limited partnership units are illiquid and require permission of the general partner to sell.
True
A major advantage to investing in Government Assisted Housing Programs is the availability of _____.
Tax credits
T/F: ETFs are marginable and may be sold short.
True
Name some of the different types of Direct Participation Programs (DPPs).
General Partnerships, limited partnerships, joint ventures,
A limited partnership could be formed by a minimum of how many individuals?
Two (one GP and one LP)
REITS: ____% of income must be distributed; ____ or less may not own more than 50%; ____+ shareholders; _____% of assets invested in real estate
90% of income distributed; 5 or less may not own more than 50%; 100+ shareholders; 75% of assets invested in real estate
T/F: Hedge Funds can assess a sales charge of more than 8.5%.
True, since Hedge Funds are exempt from Act of 1940
