Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

What are "silent partners" also known as in a business context?

1. Active Partners

2. Limited Partners

3. General Partners

4. Equity Partners

The correct answer is: Limited Partners

Silent partners are often referred to as limited partners in a business context. This term indicates that their role in the business primarily involves providing capital or resources while having limited involvement in day-to-day operations or management decisions. Limited partners typically enjoy protection from personal liability beyond their investment in the partnership, which differentiates them from general partners who are actively involved in running the business and carry full liability. The designation of a limited partner helps clarify the structure of partnerships, particularly in limited partnerships where there is a clear distinction between those who contribute capital and have limited authority, and those who manage the business and assume greater risk. This arrangement can be advantageous for investors who wish to be involved financially without taking on the responsibilities associated with actively managing the business.