Question 1

Real assets may be effective for portfolio diversification because:

Accepted Answer

A) they provide an effective hedge against deflation. 
B) they are perceived as a safe haven for investments. 
C) real and financial assets are less positively correlated than financial assets alone. 
D) None of the above 
A) they provide an effective hedge against deflation. 
B) they are perceived as a safe haven for investments. 
C) real and financial assets are less positively correlated than financial assets alone. 
D) None of the above

Question 2

Collectible items are considered to be real assets.

Accepted Answer

A) True 
 B)False

Question 3

Real estate is a particularly good investment among real assets because of:

Accepted Answer

A) depreciation write-offs. 
B) appreciation in value due to price appreciation. 
C) long-term financing. 
D) All of the above 
A) depreciation write-offs. 
B) appreciation in value due to price appreciation. 
C) long-term financing. 
D) All of the above

Question 4

Real estate investment trusts provide a large, liquid investment alternative to small investors.

Accepted Answer

A) True 
 B)False

Question 5

Disadvantages of owning diamonds include all of the following EXCEPT:

Accepted Answer

A) they are very expensive to store and insure. 
B) there are usually high dealer mark ups. 
C) they are lightweight and easily transported. 
D) there is a lack of liquidity. 
A) they are very expensive to store and insure. 
B) there are usually high dealer mark ups. 
C) they are lightweight and easily transported. 
D) there is a lack of liquidity.

Question 6

Real assets often increase in value when:

Accepted Answer

A) higher levels of inflation are anticipated. 
B) the stock market is advancing. 
C) the public is confident about world events. 
D) bond prices are advancing. 
A) higher levels of inflation are anticipated. 
B) the stock market is advancing. 
C) the public is confident about world events. 
D) bond prices are advancing.

Question 7

A real estate loan that brings in a new lender is the:

Accepted Answer

A) adjustable rate mortgage. 
B) graduate payment mortgage. 
C) second mortgage. 
D) None of the above 
A) adjustable rate mortgage. 
B) graduate payment mortgage. 
C) second mortgage. 
D) None of the above

Question 8

Compared to other investments, which of the following is not a disadvantage of investing in real assets?

Accepted Answer

A) The initial amount of money is usually large 
B) The absence of a relatively efficient, liquid market 
C) High transaction and incidental costs 
D) All of the above are disadvantages 
A) The initial amount of money is usually large 
B) The absence of a relatively efficient, liquid market 
C) High transaction and incidental costs 
D) All of the above are disadvantages

Question 9

There is often a place for real assets in a truly diversified portfolio.

Accepted Answer

A) True 
 B)False

Question 10

The time period over which real estate is financed is almost always the same period over which depreciation is taken.

Accepted Answer

A) True 
 B)False

Question 11

Under a graduated payment mortgage, annual payments are adjusted based on the new existing interest rate.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is not a real asset?

Accepted Answer

A) Mickey Mantle baseball card 
B) 100 shares of an REIT 
C) Gold bullion 
D) An apartment complex 
A) Mickey Mantle baseball card 
B) 100 shares of an REIT 
C) Gold bullion 
D) An apartment complex

Question 13

Equity participation:

Accepted Answer

A) is popular in commercial real estate. 
B) lets the lender provide borrowed capital. 
C) lets the lender provide part of the equity or ownership funds. 
D) All of the above 
A) is popular in commercial real estate. 
B) lets the lender provide borrowed capital. 
C) lets the lender provide part of the equity or ownership funds. 
D) All of the above

Question 14

Perhaps the largest disadvantage of real assets is the absence of large, liquid, and relatively efficient markets.

Accepted Answer

A) True 
 B)False

Question 15

A problem with real estate investments is that all require direct management by the owner.

Accepted Answer

A) True 
 B)False

Question 16

No one in a limited partnership arrangement has unlimited liability.

Accepted Answer

A) True 
 B)False

Question 17

Real assets may offer an opportunity as an inflation hedge because inflation means higher replacement costs for real estate, precious metals, and other physical items.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is a disadvantage of a regular partnership investment arrangement?

Accepted Answer

A) It is the simplest legal arrangement 
B) There is a well-defined center of responsibility 
C) The liability of each investor is not limited to his or her investment 
D) All of the above are advantages 
A) It is the simplest legal arrangement 
B) There is a well-defined center of responsibility 
C) The liability of each investor is not limited to his or her investment 
D) All of the above are advantages

Question 19

In a blind pool arrangement, funds are provided to the general partner to select properties for investment.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements is NOT true?

Accepted Answer

A) Like gold, silver is a good hedge against inflation 
B) Silver has extensive industrial and commercial uses 
C) The supply of silver immediately increases with the price of silver 
D) All of the above are true 
A) Like gold, silver is a good hedge against inflation 
B) Silver has extensive industrial and commercial uses 
C) The supply of silver immediately increases with the price of silver 
D) All of the above are true

Exam 20: Investments in Real Assets

Real assets may be effective for portfolio diversification because:

Collectible items are considered to be real assets.

Real estate is a particularly good investment among real assets because of:

Real estate investment trusts provide a large, liquid investment alternative to small investors.

Disadvantages of owning diamonds include all of the following EXCEPT:

Real assets often increase in value when:

A real estate loan that brings in a new lender is the:

Compared to other investments, which of the following is not a disadvantage of investing in real assets?

There is often a place for real assets in a truly diversified portfolio.

The time period over which real estate is financed is almost always the same period over which depreciation is taken.

Under a graduated payment mortgage, annual payments are adjusted based on the new existing interest rate.

Which of the following is not a real asset?

Equity participation:

Perhaps the largest disadvantage of real assets is the absence of large, liquid, and relatively efficient markets.

A problem with real estate investments is that all require direct management by the owner.

No one in a limited partnership arrangement has unlimited liability.

Real assets may offer an opportunity as an inflation hedge because inflation means higher replacement costs for real estate, precious metals, and other physical items.

Which of the following is a disadvantage of a regular partnership investment arrangement?

In a blind pool arrangement, funds are provided to the general partner to select properties for investment.

Which of the following statements is NOT true?

The Investment Setting

Security Markets

Participating in the Market

Investment Companies: Mutual Funds, Exchange-Traded Funds, Closed-End Funds, and Unit Investment Trusts

Economic Activity

Industry Analysis

Valuation of the Individual Firm

Financial Statement Analysis

Efficient Markets and Anomalies

Behavioral Finance and Technical Analysis

Bond and Fixed-Income Fundamentals

Principles of Bond Valuation and Investment

Convertible Securities and Warrants

Put and Call Options

Commodities and Financial Futures

Stock Index Futures and Options

A Basic Look at Portfolio Management and Capital Market Theory

Duration and Bond Portfolio Management

International Securities Markets

Alternative Investments: Private Equity and Hedge Funds

Measuring Risks and Returns of Portfolio Managers

A Comprehensive Analysis for Real Estate Investment Decisions

The Makeup of Institutional Investors

Filters