Question 1

Collectibles may be difficult to sell at the right price on short notice.

Accepted Answer

A) True 
 B)False

Question 2

Investment in land usually produces considerable cash flow.

Accepted Answer

A) True 
 B)False

Question 3

Diversification in direct real estate investments is:

Accepted Answer

A)  difficult.
B)  easy.
C)  always available.
D)  limited because of the small size of most real estate projects.
E)  never available.F) B) and E)
G) All of the above

Question 4

Suppose you invested $20,000 of your own money and had a $80,000 mortgage with interest rate of 6.5 percent.After one year,you sell the property for $130,000.What is your gross profit?

Accepted Answer

A)  $10,000
B)  $90,000
C)  $130,000
D)  $50,000
E)  $30,000F) A) and B)
G) A) and C)

Question 5

Perhaps the largest drawback of direct real estate investments is the absence of large,liquid,and relatively efficient markets for them.

Accepted Answer

A) True 
 B)False

Question 6

Direct real estate investments include single-family dwellings,duplexes,apartments,undeveloped land,and commercial property.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

De Beers Consolidated Mines of South Africa Ltd.controls what percent of the world's supply of rough diamonds?

Accepted Answer

A)  50
B)  65
C)  75
D)  85
E)  95F) B) and E)
G) A) and B)

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not a recommended way to invest in gold?

Accepted Answer

A)  Purchase it from any company on the internet
B)  Buy stock in a gold mining firm
C)  Purchase a mutual fund that invests in gold bullion
D)  Purchase bullion coins from the U.S.Mint directly
E)  Buy collectible coins from coin dealers that use professional services to grade the coinsF) C) and D)
G) B) and D)

Question 11

Explain what factors drive up gold prices and what factors decrease gold prices.

Accepted Answer

Gold prices tend to be driven up by fact...

Question 12

Austin has invested $50,000 as one of 5 general partners in a large shopping center that was purchased for $800,000.The shopping center has been unsuccessful and the partners fear that the property could be foreclosed upon soon.What amount is Austin liable for if the project fails?

Accepted Answer

A)  $60,000
B)  $18,000
C)  $180,000
D)  $800,000
E)  $50,000F) None of the above
G) A) and D)

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A)  Distribute at least 90 percent of the taxable annual earnings to shareholders
B)  Hire independent real estate professionals to perform certain management activities
C)  Have at least 100 shareholders with no more than half of all shares owned by 5 or fewer people
D)  Engage in only speculative,short-term holdings of real estate for quick profits
E)  Invest at least 75 percent of the total assets in real estateF) A) and C)
G) A) and E)

Question 15

Ginnie Maes and Freddie Macs are guaranteed by agencies closely tied to the federal government,making them as secure as U.S.Treasury bonds and notes.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

David Harris has invested in something that acts like a mutual fund and that invests in both mortgage loans and real estate operating companies.This investment trades on the New York Stock Exchange.What type of investment has David made?

Accepted Answer

A)  Limited partnership
B)  Equity REIT
C)  Mortgage REIT
D)  Hybrid REIT
E)  Participation certificateF) B) and D)
G) B) and C)

Question 18

Easing of international tensions or disinflation causes a decline in gold prices.

Accepted Answer

A) True 
 B)False

Question 19

When you purchase precious stones,it is difficult to determine whether you are getting a good stone.

Accepted Answer

A) True 
 B)False

Question 20

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 B)
G) B) and E)

Exam 17: Investing in Real Estate and Other Investment Alternatives

When you purchase precious stones,it is difficult to determine whether you are getting a good stone.

Correct AnswerverifiedShow Answer

Austin has invested $50,000 as one of 5 general partners in a large shopping center that was purchased for $800,000.The shopping center has been unsuccessful and the partners fear that the property could be foreclosed upon soon.What amount is Austin liable for if the project fails?

Correct AnswerverifiedShow Answer

Investment in land usually produces considerable cash flow.

Correct AnswerverifiedShow Answer

Ginnie Maes and Freddie Macs are guaranteed by agencies closely tied to the federal government,making them as secure as U.S.Treasury bonds and notes.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Perhaps the largest drawback of direct real estate investments is the absence of large,liquid,and relatively efficient markets for them.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Collectibles may be difficult to sell at the right price on short notice.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Direct real estate investments include single-family dwellings,duplexes,apartments,undeveloped land,and commercial property.

Correct AnswerverifiedShow Answer

Easing of international tensions or disinflation causes a decline in gold prices.

Correct AnswerverifiedShow Answer

David Harris has invested in something that acts like a mutual fund and that invests in both mortgage loans and real estate operating companies.This investment trades on the New York Stock Exchange.What type of investment has David made?

Correct AnswerverifiedShow Answer

Suppose you invested $20,000 of your own money and had a $80,000 mortgage with interest rate of 6.5 percent.After one year,you sell the property for $130,000.What is your gross profit?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

De Beers Consolidated Mines of South Africa Ltd.controls what percent of the world's supply of rough diamonds?

Correct AnswerverifiedShow Answer

Explain what factors drive up gold prices and what factors decrease gold prices.

Correct AnswerverifiedGold prices tend to be driven up by fact...View AnswerShow Answer

Diversification in direct real estate investments is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is not a recommended way to invest in gold?

Correct AnswerverifiedShow Answer

In general,the price of gold:

Correct AnswerverifiedShow Answer

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Gold prices tend to be driven up by fact...
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