In a partnership structure, what is true about a limited partner?

In a partnership structure, a limited partner is characterized by their liability being restricted to the amount they have invested in the partnership. This means that they are not personally responsible for the debts or obligations of the partnership beyond their initial contribution. This limited liability feature is designed to encourage investment without exposing investors to excessive personal financial risk.

In contrast, the other roles in a partnership, particularly the general partners, typically carry unlimited liability, meaning they are personally liable for all of the partnership's debts. Limited partners do not participate actively in managing the daily operations of the business; if they do, they risk losing their limited liability status and may be treated as general partners. Therefore, the nature of a limited partner’s liability is specifically designed to protect their personal assets, which reinforces the correctness of the statement regarding their financial responsibility being limited to their investment.