FIN4550 - Chapter 21 Quiz
A REIT with 100 shares outstanding earns $1,000 in rent and incurs operating expenses of $400. In addition, the REIT owns property with an historic cost of $6,000 and depreciates it over a 15 year period using straight-line depreciation. What are the funds from operations per share and the earnings per share for this REIT? 1) $4 and $3, respectively 2) $4 and $2, respectively 3) $6 and $2, respectively 4) $6 and $3, respectively
$6 and $2, respectively
An investor pays $63.00 per share for stock in a given REIT. The REIT declares a dividend of $4.00 per share and has an EPS of $2.37. Considering the recovery of capital (ROC), what is the new cost basis of the stock acquired by the investor? 1) $60.63 2) $61.37 3) $63.00 4) $64.63
$61.37
Which of the following is NOT a requirement of REITs? 1) A REIT must have at least 100 stockholders 2) Not more than 50% of a REIT's shares can be owned by five or fewer shareholders 3) At least 95% of a REIT's income must be distributed to shareholders 4) All of these are REIT requirements
All of these are REIT requirements
A REIT must have at least 200 shareholders.
False
REITs must be passive investments with external advisors.
False
The difference between EPS (earnings per share) and FFO (funds from operations) is the interest deduction.
False
Which of the following REIT types is NOT likely to own real property? 1) Hybrid REIT 2) Mortgage REIT 3) Equity REIT 4) All of the above
Mortgage REIT
The early growth of the REIT industry in the 1970s was mainly attributed to which of the following? 1) Popularity of mortgage trusts 2) Deregulation of the industry 3) Declined performance of other investments 4) Increased value of real property throughout the country
Popularity of mortgage trusts
Funds from operation (FFO), is calculated by adding back depreciation and amortization and other non-cash deductions to earnings.
True
Which of the following regarding private (unlisted) REITs is TRUE? 1) Unlisted REITs are less expensive than listed REITs 2) Unlisted REITs are less liquid than listed REITS 3) Unlisted REITs are more subject to short-term market price volatility than listed REITS 4) "List or liquidate" provisions in unlisted REITs make such REITs less risky than listed REITS
Unlisted REITs are less liquid than listed REITS
