SIE practice questioneasyREITs
A requirement for a company to qualify as a REIT is that it must:
- AInvest only in mortgage-backed securities
- BDistribute at least 90% of its taxable income to shareholders✓ Correct answer
- CGuarantee a fixed dividend
- DBe organized as a closed-end investment company
Explanation
Why B — Distribute at least 90% of its taxable income to shareholders
To qualify as a REIT, at least 90% of taxable income must be distributed. REITs invest in various real estate assets, not just mortgages (B), do not guarantee dividends (C), and are typically publicly traded companies, not closed-end funds (D).
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