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Exam 17: Investing in Real Estate and Other Investment Alternatives

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Question 21

True/False

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

A) True
B) False

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Question 22

Multiple Choice

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One of the advantages of being a limited partner in a real estate investment venture is that you have ________ liability,which means you are not liable for losses beyond your initial investment.

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

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

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Question 23

Multiple Choice

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Popular gold bullion coins today include:

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

Financial leverage is a disadvantage when property values and incomes are rising.

Land purchased with the intent of subdividing it is speculative,because it involves many risks.

First and second mortgages may potentially provide relatively high rates of return due to their special risk characteristics.

Which of the following is not a characteristic used to grade certified diamonds?

Mary Simpson bought a rental property for $100,000 cash.Later she sold the property for $130,000.What was her profit and return on this investment?

The percent return on a real estate investment equals net profit divided by the amount invested.

People primarily buy a vacation home for tax reasons according to one certified public accountant.

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

The ability of investors to use their real estate losses to offset income from wages,salaries,dividends,and interest is an aspect of a real estate syndicate that:

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

The tax shelter aspect of real estate syndicates no longer exists due to the Tax Reform Act of 1986.

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

You may invest in gold by purchasing the common stocks of gold mining companies.

Real estate investment trusts must distribute at least 90 percent of their taxable annual earnings to shareholders.

Which of the following is true of collectible coin purchases?

For residential real estate investments,the depreciation period is ________ years.