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Multiple Choice Quiz
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1
Jeff Jones has found a duplex located near a college campus that is for sale. The duplex is in good shape and he thinks that it would be a good investment since there are a lot of students that need housing near campus. What type of real estate investing is Jeff thinking about?
A)Investing in his own home
B)Investing in a vacation home
C)Investing in commercial real estate
D)Investing in undeveloped land
E)None of the above
2
Melody Brown is rather well off and wants to invest in some real estate. She has a friend who needs a mortgage to purchase her home but cannot qualify for a mortgage through a regular lender. If Melody holds the mortgage on this property, what type of real estate lending is she doing?
A)Real estate syndicate
B)Real estate investment trust
C)Investing is first and second mortgages
D)Participation certificate
E)None of the above
3
Cindy Brown wants to invest in real estate because she thinks it's a good investment. She is thinking about investing in a REIT because she does not have a lot of money to invest and wants to be able to easily sell her investment when she needs to. What advantage of real estate investing is she thinking about with this investment?
A)A hedge against inflation
B)Easy entry and exit
C)Limited financial liability
D)No management concerns
E)Financial leverage
4
Laura Dern knows that real estate can be a good investment. However she is concerned about buying a house. She is worried that it might take her as long as a year to sell her house when she wants to move. What disadvantage or investing in real estate is she worried about?
A)Illiquidity
B)Declining property values
C)Lack of diversification
D)Lack of a tax shelter
E)Long depreciation period
5
Brad Duvall is thinking about buying gold bullion. What might be one of the problems with investing in this type of investment?
A)It may be hard to store this investment safely.
B)It may be difficult to determine whether you are getting good quality.
C)You often have to purchase it at the retail price and sell it at the wholesale price.
D)Forgeries have been a significant problem in this market.
E)None of the above are problems with this investment
6
Elizabeth Gleason has found a small apartment complex near the local community college that is for sale. She is thinking about purchasing this property for the rental income it will generate. What type of direct investment in real estate is this likely to be?
A)Investing her own home
B)Investing in a vacation home
C)Investing in commercial real estate
D)Investing in undeveloped land
E)None of the above
7
Elizabeth Gleason is 75 years old. She is thinking about buying a small apartment complex that is located close to the local community college. She knows that real estate values have been increasing in the area and she will still have many other investments (including other property) after she purchases the apartments. What might be one of the problems she has to be most concerned with in this investment?
A)It may be difficult for her to manage this property herself.
B)It can be a poor hedge against inflation.
C)She will not be very diversified.
D)It is a poor tax shelter.
E)All of the above are problems she needs to be concerned with.
8
Stacey Mays has found this wonderful antique china cabinet on Ebay that she wants to purchase. What is the most likely problem she might have with this investment?
A)She may have to buy at a retail price and sell at a wholesale price.
B)There has been an increasing incident of frauds in the collectibles market.
C)She may have difficulty finding a place to store her investment.
D)If she buys it online it may be difficult for her to see any flaws that exist.
E)All of the above are potential problems with antiques.
9
A(n) _______________ is one in which the investor does not materially participate in the management of the property.
A)Direct investment
B)Indirect investment
C)Passive activity
D)Inactive investment
E)None of the above
10
A(n) _______________ is a firm that pools the money of investors to invest in real estate or make construction or mortgage loans. It is similar to a mutual fund.
A)Real estate syndicate
B)Real estate investment trust (REIT)
C)Investment in second mortgages
D)Participation certificate
E)None of the above





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