Finance

A real estate investment trust

("REIT") is a company that owns, operates or finances income-producing real estate. REITs provide all investors the chance to own valuable real estate

Which type of real estate investment trust derives its income from the rent or sale of property and interest dividends?

Hybrid REIT

An industrial development bond is a variety of ______ bond.

Municipal An industrial development bond is a variety of municipal bond. They give private investors an opportunity to take advantage of tax-exempt funds in exchange for helping to fund municipal projects, such as apartment buildings.

What does REIT stand for?

Real Estate Investment Trust

Some countries have banks that issue loans for U.S. real estate purchases. What are the main countries that participate?

Taiwan, the U.K., and Canada According to NAR, Taiwan, the U.K., and Canada are three main players in the international lending arena.

Mutual savings banks were created to serve ______ during the mid-19th century.

Workers

There are three types of international buyers: those who have work visas and are looking for a home to purchase while they're in the U.S., those who are looking for a vacation home in the U.S., and those who are looking for ______.

A luxury home to purchase as an investment Those who are looking for a luxury property as an investment are another group of international buyers.

Which of the following represents a potential concern when borrowing funds from a pension or retirement plan?

Borrowing without consulting a financial expert can result in unintended consequences, such as income tax liability and loss of retirement income. Borrowing funds from any kind of retirement account is a potentially dangerous financial plan. Anyone considering this type of loan should consult with a professional and carefully weigh all the options.

Mutual savings banks have limitations on their lending activities, as specified in their ______.

Charter A mutual savings bank's lending activities are limited by its charter and vary from state to state.

Kaycie is a new employee at a mutual savings bank. During orientation, she learned that mutual savings banks have limitations that are set by their ______.

Charter Limitations are set by the bank's charter and vary from state to state.

Memoryjet, Inc has developed a new technology for high-volume jump drives. In order to manufacture their new devices they will need to gear up a new production line, which will cost about $85 million. What kind of bond instrument could they use to help secure the funds they need for their new line?

Corporate bond Corporate bonds are used to raise capital, and would be the best choice for Memoryjet, Inc.

Which type of real estate investment trust is designed to deal exclusively in equities?

Equity REITS are owners of improved income properties and are designed to deal in equities.

Which of the following describes mutual savings bank loans?

Banks focus lending offerings on local businesses and residents. Mutual savings bank loans are offered to local businesses and residents.

Mortgage REITs

(mREITs) invest in mortgages or mortgage securities tied to commercial and/or residential properties.

In which U.S. market(s) do foreign lenders participate?

Both the primary and secondary mortgage markets Foreign lenders participate in both the primary and secondary mortgage markets.

Which type of bond is used to pay for community improvements?

Municipal bonds are used for community improvements, such as schools, street improvements, etc.

Joe decided to borrow funds from his retirement account to fund the down payment on his new house. It's now two years later and he lost his job. What is true about his pension plan?

The loan must be repaid immediately. When the loan is from an employee-sponsored pension plan, the loan must be repaid immediately or be subject to income taxes and penalties if the former employee has not reached retirement age.

Mutual savings banks prefer to keep their lending activities in their immediate geographic area. Why?

They prefer to personally monitor the loans they issue. Mutual savings banks prefer to keep their mortgage lending in the immediate geographic area (think East Coast) so they can closely monitor the loans.

Which of the following best describes an equity real estate investment trust?

Invests in equity by owning income-producing property, such as malls, apartments, or office parks Equity REITs invest in equity. These REITS own income-producing property, such as malls, apartments, or office parks.

How much of a mutual savings bank's assets come from savings accounts?

More than 70% of the assets of a mutual savings bank come from savings accounts.

Municipal bond

Municipal bonds are used for community improvements, such as schools, street improvements, etc.

More than 70% of the assets of mutual savings banks are derived from ______.

Savings accounts

Janice is planning to borrow money from her retirement savings. Which of the following is a true statement about her situation?

She should consult with a financial expert before withdrawing the funds. Borrowing funds from any kind of retirement account is a potentially dangerous financial plan. Anyone considering this type of loan should consult with a professional and carefully weigh all the options. Retake this Exam Return to Unit 2: Other Institutional Sources of Funds View Exam Results

Secured corporate bonds use ______ as collateral.

Corporate assets Corporate assets are used as collateral so that bond purchasers can repossess the asset in the event of default.

Mark and Nancy purchased a municipal bond to help with the funding of a new school gymnasium. In exchange for their investment, what will they receive?

Interest Municipal bonds are issued for community improvements. Mark and Nancy will receive interest on their bond purchase.

What did a 2019 National Association of REALTORS® study say about foreign investment in U.S. real estate?

It's less stable than in previous years. According to the National Association of REALTORS® (NAR), foreign investment in U.S. real estate is less stable than in prior years. Between April 2018 and March 2019, foreign investors purchased $77.9 billion of residential property in this country, a decrease from a peak of $153 billion just a couple of years prior. Retake this Exam Return to Unit 2: Other Institutional Sources of Funds View Exam Results

The three general groups of international buyers that real estate professionals may encounter are those who ______, those who are looking for a vacation home for when they travel to the U.S., and those who are looking for a luxury property as an investment.

Have work visas and are looking for a home to purchase while they're in the U.S. The three general groups of international buyers that real estate professionals may encounter are those who have work visas and are looking for a home to purchase while they're in the U.S., those who are looking for a vacation home for when they travel to the U.S., and those who are looking for a luxury property as an investment.

Mike has had some financial problems and is considering borrowing from his retirement plan. Which of the following is a true statement?

He should consult with a financial expert before doing so. Borrowing funds from any kind of retirement account is a potentially dangerous financial plan. Anyone considering this type of loan should consult with a professional and carefully weigh all the options. Retake this Exam Return to Unit 2: Other Institutional Sources of Funds View Exam Results

Which type of real estate investment trust involves both residential and commercial properties?

Mortgage REIT

Which type of real estate investment trust derives a portion of its income from interest dividends?

Mortgage REITs are often owners of real estate mortgage trusts (REMT) and derive a portion of their income from interest dividends.

A local town has been growing and needs a new elementary school. What kind of bond instrument will the town use to finance this project?

Municipal bond

After bonds are ______, their value goes up and down with the market.

Sold

Kathy decided to borrow funds from her retirement account to fund the down payment on her new house. Which of the following is true about this loan?

If Kathy's loan is through an employer-sponsored pension plan and she loses her job, the loan will become payable immediately. While the loan Kathy takes from her retirement account won't be used in the lender's DTI calculation, she'll have only five years to repay the loan. If the loan is from an employer-sponsored pension plan and she loses her job, the loan comes due immediately. If she's unable to pay it off or if she fails for any other reason to repay the loan, she'll face income tax consequences.

Which of the following REITs focuses on lending money for mortgages and investing in mortgage-backed securities?

Mortgage REIT Mortgage REITs lend money for mortgages and make investments in mortgage-backed securities. Retake this Exam Return to Unit 2: Other Institutional Sources of Funds View Exam Results

Mutual savings banks were created to serve ______ during the mid-19th century.

Workers Mutual savings banks are primarily concentrated along the East Coast and were created to serve workers during the industrial expansion of the mid-19th century.

Equity REITs

generate income through the collection of rent on, and from sales of, the properties they own for the long-term.