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Exam 17: Investing in Real Estate and Other Investment Alternatives

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Question 31

Multiple Choice

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For residential real estate investments,the depreciation period is ____________ years.

A) 7 1/2
B) 17 1/2
C) 20 1/2
D) 27 1/2
E) 31 1/2

F) C) and E)
G) A) and B)

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Question 32

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A REIT is similar to a mutual fund or an investment company,and it trades on stock exchanges or over-the-counter.

A) True
B) False

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Question 33

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Ginnie Maes and Freddie Macs are guaranteed by agencies closely tied to the federal government,making them almost as secure as Uncle Sam's own bonds and notes.

What are the risks and rewards of investing in precious metals,gems,and collectibles?

Real Estate Investment Trusts (REITs)must have at least 500 shareholders.

Real estate investment trusts are government-owned real estate companies.

An example of an indirect real estate investment is a(n) :

REITs,Ginnie Maes,Freddie Macs,and syndicates do not provide any diversification.

A REIT is a firm that pools investor funds and invests them in real estate or uses them to make construction or mortgage loans.

Which of the following can be a management problem when investing directly in real estate?

In a direct real estate investment,the investor holds legal title to the property.

Easing of international tensions or disinflation cause gold prices to:

Financial leverage is a disadvantage when property values and incomes are rising.

Many investors buy land with the intention of subdividing it.

If you have a vacation home,the after-tax cost of owning it in recent years has:

Jefferson Davis has invested in something that acts like a mutual fund and that invests in properties all over the country.He knows there are federal laws that require this type of investment to distribute at least 90 percent of the income to shareholders and that requires there be at least 100 shareholders.What type of investment has Jefferson made?

It takes just a few days to sell your limited partnership shares.

On small gold bars,dealers and banks add a ____________ percent premium over the pure gold bullion value.

Since first and second mortgages are risky investments,these can potentially provide relatively high rates of return.

Federal law requires REITs to have at least 20 shareholders.No more than half the shares may be owned by 15 or fewer people.