Investment Companies: Fixed UITs / REITs / BDCs
What does a BDC invest in? A. Hedge funds B. Small cap stocks C. Large cap stocks D. Privately-held companies
D. Privately-held companies
All of the following securities can be sold by an individual holding an investment companies/variable annuities registered representative's license (Series 6) EXCEPT: A. Municipal Investment Trusts B. Common Stock Funds C. Municipal Bond Funds D. Real Estate Investment Trusts
D. Real Estate Investment Trusts
An equity REIT would most likely invest in: A. apartment and office buildings B. raw land C. industrial parks D. single family homes
A. apartment and office buildings
Real Estate Investment Trusts are: I traded on stock exchanges II traded in the over-the-counter market III securities which are redeemable with the sponsor A. I only B. I and II C. II and III D. I, II, III
B. I and II
Which of the following securities can be sold by an individual holding an investment companies/variable annuities (Series 6) registered representative's license? I Municipal Investment Trusts II Real Estate Investment Trusts III Municipal Bond Funds IV Revenue Bonds A. I and II only B. I and III only C. III and IV only D. I, II, III, IV
B. I and III only
Which statements are TRUE regarding Real Estate Investment Trusts? I Mortgage REITS can only invest in long term mortgages, but not short term loans II To be regulated under Subchapter M, 90% of Net Investment Income must be distributed to shareholders III Equity REIT income is derived from the difference between net rental income and interest paid on loans IV REIT losses can be passed through to shareholders under the "conduit" rules A. I and II B. II and III C. II, III, IV D. I, II, III, IV
B. II and III
REITs can distribute all of the following to their shareholders EXCEPT: A. capital gains B. capital losses C. cash dividends D. stock dividends
B. capital losses
All of the following statements are true about REITs EXCEPT: A. gains may be passed to shareholders under conduit tax treatment B. losses may be passed to shareholders under conduit tax treatment C. 75% of assets must be invested in real estate related activities to be regulated under Subchapter M D. 90% of Net Investment Income must be distributed to shareholders to qualify under Subchapter M
B. losses may be passed to shareholders under conduit tax treatment
When comparing a BDC to a VC fund, which statement is TRUE? A. VC funds are publicly traded while BDCs are not B. BDCs make private equity investments while VC funds do not C. BDCs are registered as investment companies while VC funds are not D. VC funds are risky while BDCs are not
C. BDCs are registered as investment companies while VC funds are not
An investor has a $1,000,000 portfolio that is split evenly between "blue chip" stocks and Treasury securities. The current economic environment is characterized by low interest rates and flat stock prices - and this is expected to remain unchanged for a number of years. However, the residential and commercial real estate market is expected to be strong. The investor would like to diversify the portfolio and enhance returns without adding much additional risk. Which of the following investment purchase recommendations would help achieve this objective? A. Mortgage REITs B. Mortgage Bonds C. Equity REITs D. Fannie Mae Pass-Through Certificates
C. Equity REITs
Which sources of REIT income are counted towards the 75% test required by Subchapter M? I Net rental income II Interest income from mortgages III Real estate tax refunds IV Dividend income A. I only B. II and III only C. I, II, III D. I, II, III, IV
C. I, II, III
Which statements are TRUE about Equity REITs? I Equity REIT share prices and overall stock prices are positively correlated II Equity REIT share prices and overall stock prices are negatively correlated III Equity REIT dividends paid to shareholders are taxed at regular income tax rates IV Equity REIT dividends paid to shareholders are taxed at a preferential 15% or 20% maximum rate A. I and III B. I and IV C. II and III D. II and IV
C. II and III
REITs can invest in which of the following? I Limited partnerships II Government securities III Mortgages IV Real estate A. IV only B. II and IV C. II, III and IV D. I, II, III, IV
C. II, III and IV
Real Estate Investment Trusts are not suitable as tax advantaged investments because they: A. have too many corporate characteristics B. do not qualify for conduit tax treatment under Subchapter M C. are not allowed to pass operating losses to shareholders D. are not allowed to pass capital gains to shareholders
C. are not allowed to pass operating losses to shareholders
Unit Investment Trusts issue securities that are: A. negotiable B. fungible C. redeemable D. transferable
C. redeemable
