chapter 14

Question 1

indirect real estate investing

Answer 1

real estate investment trust: pooled money
syndicate partnership: go in with small partnership to buy property
first and second mortgages

Question 2

mutual funds

- load fund

Answer 2

a type of stock option made up of a compilation of different stocks with a financial manager to manage funds and shares (great way to diversify)
- load fund: interest the manager charges
may also request other fees

Question 3

different types of mutual funds

Answer 3

open end: any amount of shares are available to anyone (90% of stock market)
closed end: only a fixed number of shares available to market exchange (10% of the market)
index funds: simple, lower management fees, good form of diversity

Question 4

what to look for when you invest in a mutual fund?

Answer 4

fund's name, objective
- past history, professional opinions, size and types of companies
current income
expected capital growth
conservation of principal

Question 5

what is a socially responsible fund?

Answer 5

fund that provides/ avoids a particular quality that others do not.
- consider your views and opinions and determine if there are any qualities that you wish to support and deny (i.e. cigarettes, natural gas, religion, no child labor, etc)

Question 6

prospectus
annual report
professional advisory service

Answer 6

prospectus: written summary of past history of a fund
annual report: required document. the fund must provide annual info on conditions of company
professional advisory service: publicly available opinions from professionals analyzing various companies
- lipper, morning star

Question 7

advantages to investing in real estate

Answer 7

1. hedge against inflation
2. others manage it (REIT/partnership)
3. tax reduction on primary home
4. ease of entry into the market

Question 8

disadvantages to investing in real estate

Answer 8

1. could lose money (real estate is very versatile- natural disasters, depreciation, declining property value)
2. bad partners
3. must take care of damages to property
4. illiquidity/hard to sell fast and ties up money

Question 9

how are precious metals valued?

rank the 4 main precious metals

Answer 9

by weight

platinum>gold>silver>

Question 10

examples of esoteric investments

Answer 10

precious metals
gems
collectibles

Question 11

what gem does not lose its value?

Answer 11

diamonds

Question 12

TRUE/FALS: precious metals maintain a fairly stable value

Answer 12

FALSE- precious metals fluctuate widely in value

Question 13

ways to invest in precious metals

Answer 13

buy stock in the metal
buy that actual material
certificate of metals

Question 14

what are the most popular and valuable gems?

Answer 14

diamonds> emeralds> rubies> sapphire

Question 15

direct real estate investing

Answer 15

primary home
secondary home
time shares
commercial property 
raw land