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Exam 17: Investing in Real Estate and Other Investment Alternatives

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Question 21

Multiple Choice

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A vacation home is deemed a second home so long as you rent it no more than ________ per year.

A) one month
B) 14 days
C) 7 days
D) 8 weeks
E) 4 weeks

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

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Question 22

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Factors such as fear of war,political instability,and inflation cause gold prices to decline.

A) True
B) False

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Question 23

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The Tax Reform Act of 1986 adversely affected the investment potential of real estate syndicates.

The basic unit of gold bullion is one troy ounce.

Hal Lindon has an equity investment in a pool of mortgages that have been purchased by one of several government agencies.What type of investment is this?

Investment in land usually produces considerable cash flow.

A syndicate is a temporary association of individuals or firms,organized to perform a specific task that requires a large amount of capital.

It may take months to sell commercial property or limited partnership shares.

A REIT may engage in speculative,short-term holding of real estate to sell for quick profits.

The first gold bullion coin ever produced by the U.S.government was issued in 2001.

Gold bullion poses storage problems.

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

Financial leverage is the use of borrowed funds for investment purposes.

Federal law requires REITs to:

Many financial institutions hesitate to make loans on second or third mortgages.

A real estate syndicate provides professional management and unlimited liability for its members.

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

Land purchases are speculative because they involve many risks.

Andrea Mitchell has joined a real estate syndicate.The syndicate she belongs to was formed by one individual who sold participation units to Andrea and several others.The individual who sold the participation units has unlimited liability and manages the property.Andrea and the others can only lose their initial investment.What type of real estate syndicate has Andrea joined?

Prices of collectibles aren't necessarily cheaper on the Web,but it's much easier to compare them.