Question 1

As a conservative investor,you can profit by selling a call on stock already owned,giving the buyer the right to purchase your shares at a fixed strike price for a time period.

Accepted Answer

A) True 
 B)False

Question 2

People who want to invest speculatively in currencies can do so on the forex exchange.

Accepted Answer

A) True 
 B)False

Question 3

Scams and frauds abound with collectibles as investments.

Accepted Answer

A) True 
 B)False

Question 4

Investors choose derivatives

Accepted Answer

A)  to invest directly in the asset.
B)  to reduce risk by hedging against losses.
C)  to take on additional risk by speculating.
D)  both to reduce risk by hedging against losses and to take on additional risk by speculating.

Question 5

Capital improvements are costs incurred in making changes in real property that add to its value.

Accepted Answer

A) True 
 B)False

Question 6

When one trades equity in one property for equity in a similar property without receiving cash,he or she pays

Accepted Answer

A)  no income taxes in the year of the exchange.
B)  income taxes at a maximum 27 percent rate.
C)  income taxes at the normal marginal tax rate.
D)  income taxes the year following the exchange.

Question 7

Commercial property purchased to rent to other is designed for residential living such as houses,duplexes,apartments,mobile homes,and condominiums.

Accepted Answer

A) True 
 B)False

Question 8

A buyer of a futures contract benefits if the price of the commodity increases.

Accepted Answer

A) True 
 B)False

Question 9

A tax-free exchange is another tax treatment that results when a real estate investor trades equity in one property for equity in a similar property.

Accepted Answer

A) True 
 B)False

Question 10

The cost of financing investment property is shared by the government due to tax deductions on interest expenses.

Accepted Answer

A) True 
 B)False

Question 11

The discounted cash-flow method is an effective way to estimate the value or selling price of a real estate investment.

Accepted Answer

A) True 
 B)False

Question 12

The amount of money left over after paying operating expenses in an income producing investment is called profit.

Accepted Answer

A) True 
 B)False

Question 13

Borrowing to finance a real estate investment is more expensive than borrowing to buy one's own home.

Accepted Answer

A) True 
 B)False

Question 14

Examples of residential real estate investments include office buildings,medical centers,and gas stations.

Accepted Answer

A) True 
 B)False

Question 15

High-risk investments include

Accepted Answer

A)  collectibles.
B)  options.
C)  futures contracts.
D)  All of these

Question 16

Alberto bought commercial property in 1980 for $50,000.In 2011,he traded it for similar property valued at $150,000 and received $10,000 in cash.His taxable income from this transaction in 2014 would be

Accepted Answer

A)  $10,000.
B)  $50,000.
C)  $100,000.
D)  $150,000.

Question 17

____ is not an example of a capital improvement.

Accepted Answer

A)  Adding a new roof
B)  Fixing a plumbing leak
C)  Remodeling a kitchen.
D)  Putting in a sprinkler system

Question 18

Max paid $15,000 and borrowed $90,000 for an investment worth $105,000.What was the loan-to-value ratio?

Accepted Answer

A)  10 percent
B)  14 percent
C)  86 percent
D)  90 percent

Question 19

An option is a contract that
​
All of these.

Accepted Answer

A)  gives the holder the right to buy or sell a specific asset.
B)  specifies a predetermined price.
C)  specifies a time period.
D)  All of these.

Question 20

The amount of cash flow in income-producing real estate investments depends on

Accepted Answer

A)  rent received.
B)  expenses paid.
C)  method of repaying mortgage debt.
D)  All of these.

Exam 16: Real Estate and High-Risk Investments

The discounted cash-flow method is an effective way to estimate the value or selling price of a real estate investment.

Correct AnswerverifiedShow Answer

Examples of residential real estate investments include office buildings,medical centers,and gas stations.

Correct AnswerverifiedShow Answer

A buyer of a futures contract benefits if the price of the commodity increases.

Correct AnswerverifiedShow Answer

The cost of financing investment property is shared by the government due to tax deductions on interest expenses.

Correct AnswerverifiedShow Answer

A tax-free exchange is another tax treatment that results when a real estate investor trades equity in one property for equity in a similar property.

Correct AnswerverifiedShow Answer

Capital improvements are costs incurred in making changes in real property that add to its value.

Correct AnswerverifiedShow Answer

Commercial property purchased to rent to other is designed for residential living such as houses,duplexes,apartments,mobile homes,and condominiums.

Correct AnswerverifiedShow Answer

When one trades equity in one property for equity in a similar property without receiving cash,he or she pays

Correct AnswerverifiedShow Answer

Borrowing to finance a real estate investment is more expensive than borrowing to buy one's own home.

Correct AnswerverifiedShow Answer

Alberto bought commercial property in 1980 for $50,000.In 2011,he traded it for similar property valued at $150,000 and received $10,000 in cash.His taxable income from this transaction in 2014 would be

Correct AnswerverifiedShow Answer

High-risk investments include

Correct AnswerverifiedShow Answer

The amount of cash flow in income-producing real estate investments depends on

Correct AnswerverifiedShow Answer

As a conservative investor,you can profit by selling a call on stock already owned,giving the buyer the right to purchase your shares at a fixed strike price for a time period.

Correct AnswerverifiedShow Answer

____ is not an example of a capital improvement.

Correct AnswerverifiedShow Answer

The amount of money left over after paying operating expenses in an income producing investment is called profit.

Correct AnswerverifiedShow Answer

An option is a contract that ​ All of these.

Correct AnswerverifiedShow Answer

Max paid $15,000 and borrowed $90,000 for an investment worth $105,000.What was the loan-to-value ratio?

Correct AnswerverifiedShow Answer

Scams and frauds abound with collectibles as investments.

Correct AnswerverifiedShow Answer

Investors choose derivatives

Correct AnswerverifiedShow Answer

People who want to invest speculatively in currencies can do so on the forex exchange.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

An option is a contract that All of these.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified