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Free Series 39 – Direct Participation Programs Limited Principal Exam Exam Questions and Answers

Last updated: January 14, 2025

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Series 39 – Direct Participation Programs Limited Principal Exam

#Question
During a downturn, how might a DPP's general partner respond?
A.
Restructure investment strategies
B.
Cut all distributions
C.
Broaden investment criteria
D.
Increase risk in investments
Correct Answer: A
In a downturn, a DPP's general partner may restructure investment strategies to better align with current market conditions and investor interests.

Series 39 – Direct Participation Programs Limited Principal Exam

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During a downturn, how might a DPP's general partner respond?


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#Question
What is the primary aim of offering an Offering Memorandum (OM) for a DPP?
A.
To market shares
B.
To define operational duties
C.
To solicit investment
D.
To comply with regulations
Correct Answer: D
The primary aim of offering an Offering Memorandum (OM) is to comply with regulations by disclosing critical information to potential investors.

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What is the primary aim of offering an Offering Memorandum (OM) for a DPP?


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#Question
What is the potential downside of high leverage in a DPP?
A.
Greater operational stability
B.
Increased financial risk
C.
Increased asset values
D.
Reduced liquidity
Correct Answer: B
High leverage in a DPP can increase financial risk, as it may lead to greater vulnerabilities in market fluctuations.

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What is the potential downside of high leverage in a DPP?


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#Question
Which legal structure can provide limited partners with flexibility in operating a DPP?
A.
Sole proprietorship
B.
Limited partnership
C.
LLC
D.
Corporation
Correct Answer: B
A limited partnership structure provides limited partners with flexibility in operating a DPP while limiting their liabilities.

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Which legal structure can provide limited partners with flexibility in operating a DPP?


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#Question
What essential aspect of a DPP should be included in the debenture structure?
A.
Investor control
B.
Interest payments
C.
Open market trading
D.
Public disclosures
Correct Answer: B
Interest payments should be included in the debenture structure of a DPP, as they represent a return on capital invested in the program.

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What essential aspect of a DPP should be included in the debenture structure?


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#Question
Which factor is often excluded from direct performance evaluations of DPPs?
A.
Historical revenue
B.
Market caps
C.
Investment fees
D.
Asset management costs
Correct Answer: C
Investment fees are often excluded from direct performance evaluations of DPPs, as they can distort the overall perceived returns from the investment.

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Which factor is often excluded from direct performance evaluations of DPPs?


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#Question
The income derived from a DPP may also be categorized as:
A.
Deferred income
B.
Tax-exempt income
C.
Ordinary income
D.
Capital gain
Correct Answer: C
Income derived from a DPP is categorized as ordinary income, which is subject to regular income taxation.

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The income derived from a DPP may also be categorized as:


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