According to a Federal Reserve study, the average

Finance: Chapter 17 Smartbook Flashcards

According to a Federal Reserve study, the average homeowner's net worth is ________ times the net worth of the average renter.46 A business or trade, such as rental activities, in which the investor does not materially participate is called a ________ activity. This is a one-word answer found in the discussion of commercial property.Passive Federal law requires REITs to distribute at least ________ percent of their taxable annual earnings to stockholders.90 A real estate ________ is a temporary association of firms to perform a specific task that requires a large amount of capital.Syndicate The Tax Cuts and Jobs Act ________ the standard deduction, which ________ the number of households that would deduct mortgage interest.Doubled; reduced Unlike stocks and bonds, real estate lacks large, _______ and relatively efficient markets.Liquid Which of the following are drawbacks to investing in precious metals?Their eventual profit upon sale is subject to market forcesPrecious metals do not bear current income

True or false: With a direct investment in real estate, the

investor holds legal title to the property.True he deduction (for income tax purposes) of mortgage interest, depreciation, property taxes, and other real estate

related expenses on rental property is limited to:

The amount of rental income you receive Which of the following are noted as factors that appeal to investors when investing in precious stones?Inflation hedgeGreat durability A real estate ________ certificate is an equity investment in a pool of mortgages that have been purchased by a government agency such as Ginnie Mae.Participation

True or false: A firm that pools investor funds and invests

them in real estate is called a real estate consortium.False The financing for a foreclosure may be more ________ and ________ than financing your primary residence.Difficult; Expensive

True or false: In times of deflation and recession when the

stock market is declining, real estate prices are usually rising.False If you rent a vacation home out regularly, the size of your deductions is determined by whether you actively manage it and by the ________.Size of your income

True or false: Land and buildings that produce lease or

rental income are called commercial properties.True

A limited partner in a real estate venture is not liable for losses beyond their ________.Initial investment Which of the following factors cause gold prices to fall?Easing of international tensionDeflationRising interest rates

True or false: With an indirect investment in real estate, a

trustee holds the legal title to the property.True The impact of deflation and recession on real estate values depresses ________.Price Which of the following are the two most important benefits of investing in limited partnerships?Professional managementLimited liability A vacation home is deemed a second home and you can deduct the mortgage interest as long as you do not rent it for more than ________ days per year.14 When an investor holds legal title to a property, the investment is called a ________ investment in real estate.Direct Which of the following factors cause gold prices to rise?Political instabilityInflationFear of war A participation certificate is an equity investment in a pool of mortgages or ________.Student loans Lack of ________ can be a disadvantage when investing in real estate.Liquidity What metals besides gold serve as a hedge against inflation?RhodiumPlatinumSilverPalladium

True or false: Investors cannot deduct their real estate

losses from income generated by wages, salaries, dividends, and interest.True When a trustee holds legal title to real estate on behalf of an investor, that investment is called a(n) ________ investment.Indirect Which of the following are types of REITs? Mortgage REITHybrid REITEquity REIT In financing a foreclosure, one must be aware of all of the

following except:

Location of the property A limited partnership is formed by a general partner, who has ________ liability.Unlimited A syndicate can be organized as a ________. CorporationTrustLimited partnership Which of the following is true about diversification and real estate?It is difficult for the individual investor to diversify real estate investments Collectibles include which of the following? Works of artRare coinsStampsAntiques The increased ability to find obscure items on the _______ has resulted in explosion of online collecting.Internet The disadvantage of buying collectible items on the internet is that buyers can't size up dealers ________.Face to face

True or false: Financial leverage allows you to buy more

expensive real estate than you otherwise could afford and to realize a higher return on your investment.True According to a ________ study, the average home owner's net worth is 46 times the net worth of the average renter.Federal Reserve

True or false: In comparison to other investments, such as

stocks and bonds, an investment in real estate would be considered more liquid.False A business or trade, such as rental activities, in which the investor does not materially participate is called a ________ activity.Passive Which of the following best describe the contrast between the liability of a limited partner versus a general partner?As a general partner, you bear all financial risksAs a limited partner, you cannot lose more than your initial investment The risks of investing in diamonds includes liquidity and difficulty in judging ________.Quality Which of the following are examples of indirect real estate investments?Real estate syndicateREITsInvestment in 2nd mortgages ________ REITs own or operate income-producing real estate.Equity A real estate investment trust (REIT) is a firm that ________ investment funds and invests them in real estate or to make construction or mortgage loans.Pool Using borrowed funds to purchase real estate is called financial ________.Leverage Art experts and law enforcement officials say that a new generation of collectors is being victimized by ________.Forgeries Investors buying collectibles have been recently plagued by _______ that are more sophisticated and difficult to detect than ever before.Fakes Commercial property includes land and buildings that produce lease or ________ income.Rental Investing in coins or stamps is known as investing in

________.

Collectibles Which one of the following is not a federal law requirement for REITs?Invest at least 50% of total assets in real estate