SIE practice questionmediumREITs
If a REIT distributes less than 90% of its taxable income to shareholders, the REIT:
- AAutomatically becomes a mutual fund
- BMust pass through all tax losses to investors
- CMay lose its special tax treatment✓ Correct answer
- DWill be listed on a major exchange
Explanation
Why C — May lose its special tax treatment
A REIT that fails to meet the 90% taxable-income distribution requirement may lose its special tax treatment. It does not automatically become a mutual fund or receive exchange-listing status as a consequence.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Investment Companies & Packaged Products questions
- A client plans to invest $25,000 in a mutual fund and wants to maximize long-term returns while minimizing ongoing…
- A disadvantage of UITs compared to mutual funds is that UITs:
- An authorized participant in the ETF creation/redemption process primarily helps:
- A unique tax advantage of ETFs over open-end mutual funds is that ETFs:
- Which of the following best describes the liquidity risk of hedge funds?
- Which investor is generally eligible to purchase hedge funds?
- Upon purchasing units of a UIT, an investor should expect that:
- The price that an investor pays for a closed-end fund share is usually: