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A limited partner cannot take part in the management of the partnership.

A) True
B) False

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Today real estate investors must use accelerated depreciation methods to recover the costs.

A) True
B) False

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The investment tax credit has been eliminated entirely for all types of real estate except:


A) low-income housing projects.
B) single-family dwellings.
C) shopping centers.
D) raw land.
E) developed land.

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

Correct Answer

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Investors buy precious metals as a hedge against:


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

F) B) and E)
G) A) and D)

Correct Answer

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Explain the relationship between syndicates and REITs.

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A syndicate is a temporary association of individuals or firms, organized to perform a specific task that requires a large amount of capital. A syndicate may be organized as a corporation, a trust, or, most commonly, a limited partnership. REITs also invest in real estate but are more like mutual funds and are traded on stock exchanges. REITs are more liquid than syndicates.

One of the possible advantages of investing in a real estate limited partnership is that you:


A) don't have to worry about capital gains tax.
B) don't have to pay federal income tax.
C) don't have to pay state income tax.
D) can invest in a shopping center or large building by investing as little as $5,000.
E) your investment is very liquid.

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

Correct Answer

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Which type of REIT pools money to invest in new shopping malls for the sole purpose of collecting rent?


A) Mortgage
B) Compound
C) Hybrid
D) Simple
E) Equity

F) A) and B)
G) None of the above

Correct Answer

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An example of a direct real estate investment is a:


A) limited partnership.
B) real estate dwelling.
C) real estate syndicate.
D) real estate investment trust.
E) mortgage pool.

F) A) and D)
G) B) and E)

Correct Answer

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B

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) B) and D)
G) None of the above

Correct Answer

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For all types of real estate investments (EXCEPT residential real estate) , 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) B) and D)
G) All of the above

Correct Answer

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Owen Cartwright has joined a real estate syndicate that bought an office building in downtown Orlando, Florida. What type of investment does he hold?


A) Direct investment in real estate
B) Indirect investment in real estate
C) Equity REIT
D) Participation certificate
E) Mortgage REIT

F) A) and E)
G) A) and D)

Correct Answer

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What advantages do real estate investments offer?

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Real estate investments may ha...

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What are some possible disadvantages of real estate investments?

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Real estate investments may have these disadvantages: declining values, illiquidity, lack of diversification, and the reduction or elimination of tax advantages.

Land purchases are speculative because they involve many risks.

A) True
B) False

Correct Answer

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The tax shelter aspect of real estate syndicates no longer exists.

A) True
B) False

Correct Answer

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

A) True
B) False

Correct Answer

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Indirect real estate investments include investing in real estate syndicates, REITs, and participation certificates.

A) True
B) False

Correct Answer

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


A) Maintaining the rental property
B) Inability to sell your interest in a limited partnership
C) Disagreements among syndicate members
D) Limited financial liability
E) All of these are likely management problems when investing directly in real estate.

F) B) and D)
G) A) and B)

Correct Answer

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

A) True
B) False

Correct Answer

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In what type of real estate investment does the investor hold legal title to the property?


A) Ginnie Mae
B) Participation certificates (PCs)
C) Real estate investment trusts (REITs)
D) Direct investment
E) Indirect investment

F) All of the above
G) C) and D)

Correct Answer

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Showing 1 - 20 of 144

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