ch. 11 questions

A REIT is NOT used for a tax shelter because it does NOT: a. Allow flow-through of losses b. Allow flow-through of income c. Provide limited liability d. Offer income potential

a.

Concerning hedge funds, all of the following statements are TRUE, EXCEPT that the funds: a. May engage in short selling b. Must register under the '40 Act if they are offered to U.S. residents c. May borrow funds in an attempt to increase returns d. May concentrate assets into a few positions

b.

The subscription agreement for a limited partnership does NOT specify: a. Suitability standards b. Priority provisions upon liquidation c. To whom the check must be made payable d. Who must sign the agreement

b.

Which of the following investments will permit a customer to purchase publicly traded shares of a company that is MOST similar to a private equity fund? a. An exchange-traded fund b. A business development company c. An exchange-traded note d. A real estate investment trust

b.

When determining whether a customer is suitable to invest in a direct participation program, which of the following is NOT required? a. The customer is or will be in an appropriate financial position that will enable him to realize the tax benefits which are a significant aspect of the program. b. The customer is or will be in an appropriate financial position that will enable him to benefit from passive losses which are significant aspect of the program. c. The customer has a net worth that's sufficient to sustain the risks inherent in the program, including lack of liquidity. d. The customer has a net worth that's sufficient to sustain the risks inherent in the program, including the loss of investment.

b.

Which of the following statements is TRUE concerning registered nontraded real estate investment trusts (REITs)? a. They offer investors the same amount of liquidity as exchange-traded REITs b. They are required to distribute the same percentage of taxable income as exchange-traded REITs c. They are not required to make periodic disclosures that are required of exchange-traded REITs d. They are suitable for the same investors as exchange-traded REITs

b.

The main difference between a registered exchange-traded REIT and a registered nontraded REIT is: a. The type of assets in which they are permitted to invest b. The types of disclosures they are required to make to investors c. The amount of liquidity each of the securities has d The tax treatment of each of the securities

c.

All of the following actions create a conflict of interest for a general partner, EXCEPT if the general partner is: a. Accepting a payment not to compete with the program b. Holding partnership monies in his personal bank account c. Selling property that he owns to the partnership d. Lending money to the partnership at prevailing interest rates

d.

All of the following characteristics are TRUE of REITs, EXCEPT they: a. Are not exempt from the Securities Act of 1933 b. Are not regulated investment companies c. May not pass losses through to the investors d. May not be traded on an exchange

d.

Which of the following entities does not pass through both income and losses? a. A limited liability company (LLC) b. A limited partnership c. A Subchapter S Corporation d. A real estate investment trust (REIT)

d.