Exam 16: Real Estate and High-Risk Investments

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Jodi has a duplex with operating income of $6,000 before depreciation.If the duplex cost $150,000 including $40,000 land value,how much is Jodi's taxable income after depreciation?

(Multiple Choice)
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Puts are a conservative investment that can be used to reduce market risk.

(True/False)
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Hedge funds are limited to "accredited investors and purchasers" who have incomes over $1 million.

(True/False)
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The services of a real estate attorney will be needed to help handle the real estate purchase,sale,building inspections,zoning issues,tenant problems,insurance disputes,and any liability issues.

(True/False)
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Low-risk investors can profit from increases or decreases in the prices of various commodities and commercial products by buying and selling futures contracts.

(True/False)
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______ stocks are stocks that trade for less than $5 per share.

(Multiple Choice)
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The ____ is a computation of how much income the investor might pocket from rent each year before mortgage payments as a percentage of the purchase price.

(Multiple Choice)
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People who want to invest speculatively in currencies can do so on the ____ exchange.

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A hedge fund

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The IRS allows interest and real estate tax deductions on a second home.

(True/False)
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The writer of a put may incur a loss when the market price of an optioned asset rises above the striking price.

(True/False)
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Puts allow the holder of the contract to sell an asset at a specific striking price for a certain time period before the expiration date.

(True/False)
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A real estate bubble is rapid and unsustainable increases in home prices followed by sharp declines in values.

(True/False)
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When directly owning a real estate investment,the actual title is held by the investors.

(True/False)
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Which of the following is true regarding futures trading?

(Multiple Choice)
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Ownership costs include the cost of capital improvements as well as the original cost of the property.

(True/False)
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Which of the following statements about options is not true?

(Multiple Choice)
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Commercial properties are generally more risky investments than residential properties.

(True/False)
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When an asset does not generate a readily quantifiable return (such as rent,interest,or dividends),its value is mainly determined by supply and demand.

(True/False)
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Capital gains on real estate are realized through price depreciation.

(True/False)
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