Which of the following is true regarding whether the interest of a limited partner in a limited partnership is considered a security?
A) Such an interest is considered a security only if the limited partnership involves an investment in real estate.
B) Such an interest is not considered a security because a partnership,not an investment scheme,is involved.
C) Such an interest is rarely considered a security because limited partners,to protect their limited liability,are prohibited by law from taking part in the control of the partnership business.
D) Such an interest is almost always considered a security because limited partners,to protect their limited liability,are prohibited by law from taking part in the control of the partnership business.

Question

Quizplus · Accepted Answer

The interest of a limited partner in a limited partnership is almost always considered a security because limited partners, in order to protect their limited liability, are prohibited by law from taking part in the control of the partnership business. This prohibition means that the limited partner has little or no input into the operation of the business and relies mainly on the general partner to make investment decisions. Therefore, the limited partner's interest is considered an investment in which they are relying on the efforts of others (i.e., the general partner) to generate a profit, which meets the definition of a security under federal securities laws.

Which of the Following Is True Regarding Whether the Interest