Series 7 practice questionmediumDirect Participation Programs 449
The primary economic attraction of an oil and gas drilling program for many investors has historically been:
- Adaily liquidity on an exchange
- BFDIC coverage of drilling losses
- Cpotential tax benefits and participation in production revenues✓ Correct answer
- Dguaranteed principal repayment
Explanation
Why C — potential tax benefits and participation in production revenues
Oil and gas programs have often been marketed on the basis of tax treatment and participation in production economics. They also carry substantial business, commodity, and liquidity risk.
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