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).
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
- Hedge funds are typically available only to:
- Rising interest rates generally have what effect on REIT prices?
- A hedge fund lock-up period refers to:
- To qualify as a REIT, a company must meet all of the following requirements EXCEPT:
- The traditional hedge fund fee structure known as '2 and 20' refers to:
- REIT dividends are typically taxed as:
- Which of the following strategies is commonly used by hedge funds but NOT typically available to mutual funds?
- Which statement about non-traded REITs is TRUE?