Reading 76: Alternative Investments - LOS d, (Part 1)～ Q

答案和详解如下：

1.Which of the following is least likely to be a form of real estate investment?

A)   Leveraged equity position.

B)   Outright or fee-simple ownership.

C)   Aggregation vehicles.

D)   Property insurance.

The correct answer was D)

Property insurance is not considered a category of real estate investment because the underlying real estate does not revert to the insurer if the property holder allows the policy to lapse. Outright ownership, a leveraged equity position, and aggregation vehicles such as real estate investment trusts are all forms of real estate investment.

2.Mortgages are considered to be a form of real estate investment because:

A)   the borrower will own the property at the end of the loan term.

B)   the investor receives a constant stream of cash flows.

C)   if the borrower defaults on the loan, the lender may end up owning the property.

D)   mortgages can be traded in the secondary market.

The correct answer was C)

It is true that the borrower will own the property if all loan terms are met, but the question is stated in terms of the mortgage lender, not the borrower. The investor anticipates a constant stream of cash flows, similar to other fixed income investments, but is also subject to defaults as well as prepayments. The mortgages can be traded in the secondary market, but that feature alone does not classify mortgages as a real estate investment. If the borrower defaults on the terms of the loan, the property will revert back to the lender, and this exposure is the reason why mortgages are considered a real estate investment.

3.Investors can diversify their direct real estate holdings through all of the following vehicles EXCEPT:

A)   commingled funds.

B)   co-operative shares.

C)   limited partnerships.

D)   real estate investment trusts (REITs).

The correct answer was B)

Real estate co-operatives are generally a tool with which multiple owners can purchase shares in a single building or complex. This strategy spreads out risk among many investors but doesn’t offer much in the way of diversification for a single investor. Commingled funds, limited partnerships, and REITs typically allow investors to spread their bets either geographically or through different property types.

4.Demand for real estate is a function of all of the following factors EXCEPT?

A)   Competitive properties.

B)   The market area's economic base.

C)   Population characteristics of the community.

D)   The terms and conditions of mortgage financing.

The correct answer was A)

This is a determinant of the supply of real estate property. The other choices are determinants of demand.