What bestdescribes the liability of limited partners in a limited partnership?

In a limited partnership, the liability of limited partners is strictly limited to the amount of their investment in the partnership. They do not participate in the day-to-day management or operational decision-making of the partnership. This characteristic ensures that their personal assets are protected beyond their contribution to the partnership.

If limited partners were to engage in the management of the partnership, they could potentially lose their limited liability protection and be treated as general partners, exposing their personal assets to liability.

This concept is foundational in business structures like limited partnerships, allowing investors to contribute capital without risking their personal wealth beyond the agreed investment.

Study Document References:

Volume 1, Section on Corporations and Financial Structures:This section discusses different forms of business organizations, including partnerships, and highlights the limited liability of investors in structures like limited partnerships​​.