Question 1

Which of the following is a possible disadvantage of real estate investments?

Accepted Answer

A)  lack of involvement in property maintenance
B)  hedge against inflation
C)  illiquidity
D)  lack of financial risk
E)  capital requirements for total venture may be highF) A) and E)
G) A) and D)

Question 2

Increasing interest rates in the economy cause gold prices to:

Accepted Answer

A)  skyrocket.
B)  increase moderately.
C)  remain stable.
D)  decline.
E)  change,but the direction of the change cannot be predicted.F) B) and E)
G) A) and D)

Question 3

In general,the price of gold:

Accepted Answer

A)  is stable.
B)  fluctuates daily.
C)  changes monthly.
D)  is unaffected by political upheavals.
E)  is unaffected by economic conditions.F) A) and D)
G) B) and D)

Question 4

A REIT must invest all of its assets in real estate.

Accepted Answer

A) True 
 B)False

Question 5

Investors buy precious metals as a hedge against:

Accepted Answer

A)  recession.
B)  depression.
C)  inflation.
D)  deflation.
E)  rising value of the U.S.dollar.F) B) and E)
G) B) and C)

Question 6

Real Estate Investment Trusts (REITs)must distribute at least 90 percent of their net annual earnings to shareholders.

Accepted Answer

A) True 
 B)False

Question 7

Presently you are required to use which method of depreciation in real estate investments?

Accepted Answer

A)  sum-of-the-digits
B)  straight-line
C)  rule of 78s
D)  Last In First Out (LIFO) 
E)  First in First Out (FIFO) F) A) and E)
G) D) and E)

Question 8

Which one of the following is not required of a REIT by federal law?

Accepted Answer

A)  distributing 90 percent or more of the taxable annual earnings to shareholders.
B)  hiring independent real estate professionals to perform certain management activities.
C)  having at least 100 shareholders with no more than half of all shares owned by 5 or fewer people.
D)  making direct investments only in apartment houses,shopping malls,and other commercial property.
E)  investing at least 70 percent of the total assets in real estatE.F) A) and D)
G) B) and D)

Question 9

Real estate investments are classified as:

Accepted Answer

A)  participating or nonparticipating.
B)  common or preferred.
C)  cumulative or noncumulative.
D)  direct or indirect.
E)  none of the other answers.F) C) and D)
G) B) and D)

Question 10

One of the advantages of being a limited partner in a real estate investment venture is that you have ____________ liability.

Accepted Answer

A)  no financial
B)  unlimited financial
C)  product
D)  limited financial
E)  impliedF) B) and D)
G) All of the above

Question 11

You may invest in gold by purchasing the common stocks of gold mining companies.

Accepted Answer

A) True 
 B)False

Question 12

If you are a limited partner,you are liable for losses beyond your initial investment.

Accepted Answer

A) True 
 B)False

Question 13

With an indirect real estate investment,the investors appoint a trustee to hold legal title on behalf of all the investors in the group.

Accepted Answer

A) True 
 B)False

Question 14

REITs,Ginnie Maes,and Freddie Macs are examples of ____________ real estate investments.

Accepted Answer

A)  direct
B)  indirect
C)  safe
D)  risky
E)  speculativeF) None of the above
G) B) and C)

Question 15

Diane Chambers buys an apartment building for $2 million.Which one of the following exhibits the highest degree of financial leverage?

Accepted Answer

A)  $500,000 down payment and mortgage of $1,500,000
B)  $250,000 down payment and loan of $1,750,000
C)  $150,000 down payment and loan of $1,850,000
D)  $100,000 down payment and loan of $1,900,000
E)  $1 million down payment and loan of $1 millionF) D) and E)
G) C) and E)

Question 16

It is much easier today to find and trade in collectibles than it was in prior years.Which one of the following is primarily the reason for this?

Accepted Answer

A)  telephone
B)  World Wide Web
C)  magazines
D)  plane travel
E)  automobilesF) A) and C)
G) A) and D)

Question 17

What are some possible disadvantages of real estate investments?

Accepted Answer

Real estate investments may ha...

Question 18

Real property equity investments are usually considered attractive during times of:

Accepted Answer

A)  deflation.
B)  disinflation.
C)  inflation.
D)  recession.
E)  unemployment.F) B) and D)
G) B) and E)

Question 19

Ginnie Maes are backed by the full faith and credit of the Federal Government.

Accepted Answer

A) True 
 B)False

Question 20

Jane Calvert owns a condominium at the beach which she rents out to vacationers.What type of investment does she hold?

Accepted Answer

A)  direct investment in real estate
B)  indirect investment in real estate
C)  equity REIT
D)  participation certificate
E)  mortgage REITF) C) and E)
G) A) and E)

Exam 17: Investing in Real Estate and Other Investment Alternatives

Real property equity investments are usually considered attractive during times of:

Correct AnswerverifiedShow Answer

With an indirect real estate investment,the investors appoint a trustee to hold legal title on behalf of all the investors in the group.

Correct AnswerverifiedShow Answer

Real estate investments are classified as:

Correct AnswerverifiedShow Answer

If you are a limited partner,you are liable for losses beyond your initial investment.

Correct AnswerverifiedShow Answer

A REIT must invest all of its assets in real estate.

Correct AnswerverifiedShow Answer

Real Estate Investment Trusts (REITs)must distribute at least 90 percent of their net annual earnings to shareholders.

Correct AnswerverifiedShow Answer

Ginnie Maes are backed by the full faith and credit of the Federal Government.

Correct AnswerverifiedShow Answer

REITs,Ginnie Maes,and Freddie Macs are examples of ____________ real estate investments.

Correct AnswerverifiedShow Answer

Presently you are required to use which method of depreciation in real estate investments?

Correct AnswerverifiedShow Answer

You may invest in gold by purchasing the common stocks of gold mining companies.

Correct AnswerverifiedShow Answer

Investors buy precious metals as a hedge against:

Correct AnswerverifiedShow Answer

What are some possible disadvantages of real estate investments?

Correct AnswerverifiedReal estate investments may ha...View AnswerShow Answer

Which of the following is a possible disadvantage of real estate investments?

Correct AnswerverifiedShow Answer

In general,the price of gold:

Correct AnswerverifiedShow Answer

Which one of the following is not required of a REIT by federal law?

Correct AnswerverifiedShow Answer

Increasing interest rates in the economy cause gold prices to:

Correct AnswerverifiedShow Answer

Diane Chambers buys an apartment building for $2 million.Which one of the following exhibits the highest degree of financial leverage?

Correct AnswerverifiedShow Answer

One of the advantages of being a limited partner in a real estate investment venture is that you have ____________ liability.

Correct AnswerverifiedShow Answer

Jane Calvert owns a condominium at the beach which she rents out to vacationers.What type of investment does she hold?

Correct AnswerverifiedShow Answer

It is much easier today to find and trade in collectibles than it was in prior years.Which one of the following is primarily the reason for this?

Correct AnswerverifiedShow Answer

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Real estate investments may ha...
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