Read each question and choose the best answer.

Question

Why might a limited partnership have a greater ability to raise capital than a general partnership?
A. increased access to corporate funds
B. increased attractiveness due to limits on liability
C. increased probability of corporate acquisition
D. increased share of profits with more investors

Answer 1

The best answer is:

B. increased attractiveness due to limits on liability

Limited partnerships have limited partners whose liability is limited to their investment in the partnership, making it more attractive for potential investors. This limited liability can encourage more individuals to invest capital compared to a general partnership, where all partners typically have unlimited liability.