Series 7 Exam Question 323: Answer and Explanation

Question: 323

An investor wants to invest in a DPP that's relatively safe. Which of the following are you LEAST likely to recommend?

• A. A real-estate partnership that invests in raw land
• B. An oil and gas developmental program
• C. An oil and gas income program
• D. An equipment leasing program

Correct Answer: A

Explanation:

A. Of the choices listed, a real-estate partnership that invests in raw land is the riskiest. Partnerships that invest in raw land are considered speculative, as are oil and gas wildcatting (exploratory) programs. The risk of investing in raw land is that even though the property is purchased at a low price, developers may not be interested in that area and the partnership may be stuck with relatively worthless property.