SIE practice questioneasyREITs — Diversification Benefits
One advantage of investing in a publicly traded REIT compared to direct real estate ownership is:
- AREITs guarantee higher returns than direct ownership
- BREITs provide liquidity since shares can be bought and sold on stock exchanges✓ Correct answer
- CREITs have no management fees
- DREITs are immune to real estate market downturns
Explanation
Why B — REITs provide liquidity since shares can be bought and sold on stock exchanges
Publicly traded REITs offer liquidity — shares trade on stock exchanges and can be bought/sold throughout the trading day, unlike direct real estate which can take months to sell. REITs also offer diversification, professional management, and lower minimum investments. However, they DO have management fees (C), cannot guarantee returns (A), and ARE affected by real estate market conditions (D).
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