Question 1

One of the advantages of investing in limited partnerships,REITs,mortgages,or participation certificates is that you do not need to worry about:

Accepted Answer

A)  federal income taxes.
B)  state income taxes.
C)  capital gains taxes.
D)  declining property taxes.
E)  maintenance chores.

Question 2

Financial leverage enables you to acquire a more expensive property than you could on your own.

Accepted Answer

A) True 
 B)False  True

Question 3

The prices of single-family houses:

Accepted Answer

A)  tend to rise over time,thereby acting as a hedge against inflation.
B)  rise less than the Consumer Price Index.
C)  always increase in value.
D)  tend to be countercyclical,thereby acting as a hedge against the business cycle.
E)  remain constant over timE.

Question 4

An example of an indirect real estate investment is:

Accepted Answer

A)  a single-family home.
B)  a duplex.
C)  a real estate investment trust (REIT) .
D)  lanD.
E)  an apartment building.

Question 5

If you want a relatively risk-proof real estate investment,participation certificates (PCs)are for you.

Accepted Answer

A) True 
 B)False

Question 6

Lynn Roy owns three,two-carat diamonds that she received from her grandmother who did not believe in banks or stocks and bonds.What type of investment does she hold?

Accepted Answer

A)  direct investment in real estate
B)  indirect investment in real estate
C)  precious metals
D)  collectibles
E)  gems

Question 7

Diversification in direct real estate investment is difficult because of the large size of most real estate projects.

Accepted Answer

A) True 
 B)False

Question 8

The tax shelter aspect of a real estate syndicate:

Accepted Answer

A)  no longer exists.
B)  is strengthened by the Tax Reform Act of 1986.
C)  has remained unchanged since 1980.
D)  improves the liquidity of real estate syndicates.
E)  is available only to limited partners.

Question 9

General partners in a real estate investment venture have ____________ liability.

Accepted Answer

A)  no financial
B)  unlimited financial
C)  limited financial
D)  express
E)  implied

Question 10

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

Accepted Answer

A) True 
 B)False  True

Question 11

What is the annual depreciation for tax purposes on residential real estate purchased at a cost of $200,000?

Accepted Answer

A)  $6,349
B)  $20,000
C)  $2,750
D)  $7,273
E)  $6,667

Question 12

You can avoid storage and assaying problems by investing in gold bullion coins.

Accepted Answer

A) True 
 B)False  True

Question 13

You can avoid assaying problems by investing in:

Accepted Answer

A)  gold.
B)  gold wafers.
C)  gold bars.
D)  gold bullion.
E)  gold bullion coins.

Question 14

The primary reason people buy a vacation home is because they want to use it.

Accepted Answer

A) True 
 B)False

Question 15

Explain the relationship between syndicates and REITs.

Accepted Answer

A syndicate is a temporary association o...

Question 16

During which of the following economic periods is the price of a precious metal,such as gold,silver or platinum,likely to increase?

Accepted Answer

A)  recession
B)  depression
C)  peace time
D)  deflationary
E)  inflationary

Question 17

A passive activity is a business or trade in which you do not materially participate.

Accepted Answer

A) True 
 B)False

Question 18

Passive loss is the total amount of losses from a passive activity minus the total income from the passive activity.

Accepted Answer

A) True 
 B)False

Question 19

What advantages do real estate investments offer?

Accepted Answer

Real estate investments may ha...

Question 20

An example of a direct real estate investment is a:

Accepted Answer

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

Exam 17: Investing in Real Estate and Other Investment Alternatives

One of the advantages of investing in limited partnerships,REITs,mortgages,or participation certificates is that you do not need to worry about:

Correct AnswerverifiedShow Answer

Financial leverage enables you to acquire a more expensive property than you could on your own.

Correct AnswerverifiedTrue

The prices of single-family houses:

Correct AnswerverifiedShow Answer

An example of an indirect real estate investment is:

Correct AnswerverifiedShow Answer

If you want a relatively risk-proof real estate investment,participation certificates (PCs)are for you.

Correct AnswerverifiedShow Answer

Lynn Roy owns three,two-carat diamonds that she received from her grandmother who did not believe in banks or stocks and bonds.What type of investment does she hold?

Correct AnswerverifiedShow Answer

Diversification in direct real estate investment is difficult because of the large size of most real estate projects.

Correct AnswerverifiedShow Answer

The tax shelter aspect of a real estate syndicate:

Correct AnswerverifiedShow Answer

General partners in a real estate investment venture have ____________ liability.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedTrue

What is the annual depreciation for tax purposes on residential real estate purchased at a cost of $200,000?

Correct AnswerverifiedShow Answer

You can avoid storage and assaying problems by investing in gold bullion coins.

Correct AnswerverifiedTrue

You can avoid assaying problems by investing in:

Correct AnswerverifiedShow Answer

The primary reason people buy a vacation home is because they want to use it.

Correct AnswerverifiedShow Answer

Explain the relationship between syndicates and REITs.

Correct AnswerverifiedA syndicate is a temporary association o...View AnswerShow Answer

During which of the following economic periods is the price of a precious metal,such as gold,silver or platinum,likely to increase?

Correct AnswerverifiedShow Answer

A passive activity is a business or trade in which you do not materially participate.

Correct AnswerverifiedShow Answer

Passive loss is the total amount of losses from a passive activity minus the total income from the passive activity.

Correct AnswerverifiedShow Answer

What advantages do real estate investments offer?

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

An example of a direct real estate investment is a:

Correct AnswerverifiedShow Answer

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A syndicate is a temporary association o...
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Real estate investments may ha...
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