QUESTION: ARE DIRECT PARTICIPATION PROGRAMS COVERED IN THE SECURITIES INDUSTRY ESSENTIALS EXAM? ANSWER: YES!

Must you be prepared for questions on the Securities Industry Essentials exam about Direct Participation Programs (DPP)? Yes, the SIE exam has questions about DPPs.

First of all, what is a direct participation program? It is an investment or asset in which the partners or investors share in the profits and losses of the enterprise, without a middleman, such as a corporation, intervening between investor and investment.

A good example is a limited partnership. In such partnership, the partners share in any profits as well as losses, if there are any. This is an advantage. There is no double taxation. All gains and losses pass through directly to the partners.

As to disadvantages, an investment in a limited partnership is by and large illiquid. This means that there is no ready or liquid market to sell a limited partnership once a person has purchased it.

FINRA's Content Outline includes direct participation programs and limited partnerships in Section 2.1.6.

Here is the link to FINRA's Content Outline for the SIE exam. See the references to Direct Participation Programs in FINRA's Content Outline, section 2.1.6.

Study for the Securities Industry Essentials (SIE) Exam is available from Amazon in both paperback and Kindle e-book versions. Here is the link to Bob Eder's book on Amazon.

See Bob Eder's Author Page on Amazon.com.

For questions about Bob Eder's SIE manual, Study for the Securities Industry Essentials (SIE) Exam, or questions in general about the SIE exam, such as direct participation programs or limited partnerships, feel free to email Bob Eder at bobeder@bobeder.net.

Bob Eder received his Juris Doctor (J.D.) degree from the University of Utah, Quinney College of Law, in 2001. 

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