Limited Partnerships

KNOWLEDGE EXPECTED OF: QAFP® Professionals

Highest Knowledge Level: Awareness

Knowledge Levels and Associated Verbs


Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
Define
To state exactly the meaning of
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
Compare
To note the similarities and differences between two or more things
Estimate
To determine an approximate value for
Calculate
To find the value using mathematics
Convert
To change from one form or purpose to another
Evaluate
To reach a conclusion or make a through careful study
Interpret
To give the meaning of / to construe or understand / to translate orally

Hold cursor over or click on each term to read its definition.

  • Define a limited partnership.
  • Identify the purpose for which a limited partnership may be used.

KNOWLEDGE EXPECTED OF: CFP® Professionals

Highest Knowledge Level: Evaluation

Knowledge Levels and Associated Verbs


Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
Define
To state exactly the meaning of
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
Compare
To note the similarities and differences between two or more things
Estimate
To determine an approximate value for
Calculate
To find the value using mathematics
Convert
To change from one form or purpose to another
Evaluate
To reach a conclusion or make a through careful study
Interpret
To give the meaning of / to construe or understand / to translate orally

Hold cursor over or click on each term to read its definition.

  • Define a limited partnership.
  • Identify the purpose for which a limited partnership may be used.
Additional Knowledge Expected of CFP Professionals
  • Determine how each of these factors may impact the suitability of a limited partnership:
    • Time horizon
    • Volatility
    • Risk tolerance
    • Investment objective
    • Financial situation
    • Personal situation
    • Income
    • Liquidity
    • Control
    • Tax impact
    • Investment management process
    • Economic cycle
    • Cost
    • Historical performance
    • Performance expectations
  • Evaluate how each of the factors may impact the suitability of a limited partnership.
  • Explain for whom a limited partnership may be suitable.
  • Identify that a limited partnership can invest in different types of assets or projects. 
  • Identify that the risks associated with a limited partnership need to be assessed on a case-by-case basis. 
  • Identify that investors in a limited partnership cannot participate in the day-to-day operations of the partnership.
  • Identify that holding periods may exist when investing in limited partnerships. 
  • Explain how income earned by a limited partnership is handled when distributed to unitholders of the limited partnership. 
  • Identify factors that may affect the risk of a limited partnership, such as:
    • The risk of the underlying assets that the limited partnership is invested in
    • The management of the limited partnership
  • Identify the potential tax consequences of a limited partnership.
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