Question 1

Brian Wilson has several baseball cards passed down to him from his grandfather.He is particularly proud of the signed Hank Aaron baseball card that he has.What type of investment does he hold?

Accepted Answer

A)  direct investment in real estate
B)  indirect investment in real estate
C)  precious metals
D)  collectibles
E)  gemsF) D) and E)
G) B) and D)

Question 2

Investments in silver,platinum,palladium,and rhodium are not used as a hedge against inflation.

Accepted Answer

A) True 
 B)False

Question 3

Most gold brokers require a minimum order of ten billion coins and charge a commission of at least two percent.

Accepted Answer

A) True 
 B)False

Question 4

Illiquidity in real estate means that:

Accepted Answer

A)  you can quickly find someone who is willing to pay full value to purchase the property.
B)  you don't have a water well on the property.
C)  you cannot quickly sell the property.
D)  you don't have financial leverage.
E)  there is an efficient market for the property.F) A) and D)
G) B) and D)

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

If a gold bullion bar does not remain in the possession of the dealer or bank that sells it,what must happen before it can be resold?

Accepted Answer

A)  It must be made into coins.
B)  It must be pounded flat.
C)  It must be reassayed.
D)  It must be turned into jewelry.
E)  It must be taxed.F) A) and D)
G) C) and D)

Question 7

Commercial property refers to land and buildings that produce lease or rental income.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Which type of REIT invests directly in properties?

Accepted Answer

A)  compound
B)  equity
C)  mortgage
D)  hybrid
E)  simpleF) All of the above
G) B) and C)

Question 10

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

Accepted Answer

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) B) and D)
G) A) and C)

Question 11

Which one of the following real-estate investments provides some diversification?

Accepted Answer

A)  a single-family dwelling
B)  an apartment building
C)  raw land
D)  a second mortgage
E)  a real estate investment trust (REIT) F) B) and C)
G) None of the above

Question 12

Diversification in direct real estate investments is:

Accepted Answer

A)  difficult and expensive.
B)  easy and inexpensive.
C)  a drawback.
D)  easier than diversification in indirect real estate investments.
E)  difficult but inexpensivE.F) A) and D)
G) A) and C)

Question 13

Financial leverage refers to:

Accepted Answer

A)  the use of borrowed funds for investment purposes.
B)  the mathematical law of large numbers.
C)  financial averages.
D)  buying and selling short.
E)  limiting financial liability.F) D) and E)
G) None of the above

Question 14

An advantage of purchasing diamonds for investment purposes is that:

Accepted Answer

A)  diamonds are not easily turned into cash.
B)  diamonds are relatively limited in supply.
C)  diamonds are largely controlled by DeBeers Consolidated Mines of South Africa.
D)  the grading of diamonds is not an exact science.
E)  diamonds are typically bought at retail and sold at wholesalE.F) A) and D)
G) A) and B)

Question 15

Limited partnerships and syndicates are examples of direct real estate investment.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

One needs at least $25,000 to indirectly invest in participation certificates.

Accepted Answer

A) True 
 B)False

Question 18

The limited partnership is formed by a limited partner,who has unlimited liability for its debts.

Accepted Answer

A) True 
 B)False

Question 19

A participation certificate is an equity investment in a pool of mortgages that have been purchased by one of several government agencies.

Accepted Answer

A) True 
 B)False

Question 20

If you want a risk-proof real estate investment,invest in:

Accepted Answer

A)  real estate investment trusts.
B)  real estate limited partnerships.
C)  participation certificates (PCs) .
D)  real estate syndicates.
E)  post office buildings.F) C) and D)
G) B) and E)

Exam 17: Investing in Real Estate and Other Investment Alternatives

If you want a risk-proof real estate investment,invest in:

Correct AnswerverifiedShow Answer

Brian Wilson has several baseball cards passed down to him from his grandfather.He is particularly proud of the signed Hank Aaron baseball card that he has.What type of investment does he hold?

Correct AnswerverifiedShow Answer

Diversification in direct real estate investments is:

Correct AnswerverifiedShow Answer

Limited partnerships and syndicates are examples of direct real estate investment.

Correct AnswerverifiedShow Answer

Which type of REIT invests directly in properties?

Correct AnswerverifiedShow Answer

Most gold brokers require a minimum order of ten billion coins and charge a commission of at least two percent.

Correct AnswerverifiedShow Answer

Financial leverage refers to:

Correct AnswerverifiedShow Answer

Which one of the following real-estate investments provides some diversification?

Correct AnswerverifiedShow Answer

Investments in silver,platinum,palladium,and rhodium are not used as a hedge against inflation.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Commercial property refers to land and buildings that produce lease or rental income.

Correct AnswerverifiedShow Answer

An advantage of purchasing diamonds for investment purposes is that:

Correct AnswerverifiedShow Answer

A participation certificate is an equity investment in a pool of mortgages that have been purchased by one of several government agencies.

Correct AnswerverifiedShow Answer

One needs at least $25,000 to indirectly invest in participation certificates.

Correct AnswerverifiedShow Answer

If a gold bullion bar does not remain in the possession of the dealer or bank that sells it,what must happen before it can be resold?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Illiquidity in real estate means that:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The limited partnership is formed by a limited partner,who has unlimited liability for its debts.

Correct AnswerverifiedShow Answer

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