Chapter 20

Question 1

the land and buildings that produce rental income

Answer 1

commercial property

Question 2

real estate investment in which you hold legal title to a property

Answer 2

direct investment

Question 3

real estate investment in which a trustee is appointed to hold legal title to the property on behalf of an investor group or group of investors

Answer 3

indirect investment

Question 4

temporary association of individuals or business firms organized to perform a task that requires a large amount of funds

Answer 4

syndicate

Question 5

an investment in a group of mortgages that have been purchased by a government agency

Answer 5

participation certificate (PC)

Question 6

the use of borrowed funds for direct investment purposes

Answer 6

financial leverage

Question 7

include such valuable ores as gold, platinum, and silver

Answer 7

precious metals

Question 8

rough mineral deposits (usually crystals) that are dug from the earth by miners and then cut and shaped into brilliant jewels

Answer 8

precious gems

Question 9

rare coins, works of art, antiques, paintings, stamps, rare books, comic books, sports memorabilia, and other items that appeal to collectors and investors

Answer 9

collectibles

Question 10

responsible

Answer 10

liable

Question 11

higher than expected

Answer 11

handsome

Question 12

protection

Answer 12

hedge

Question 13

rise quickly

Answer 13

soar

Question 14

______ is using borrowed money so that you can purchase more expensive property.

Answer 14

financial leverage

Question 15

The owner of a(n) _____ holds the legal title to a purchased property, such as a single-family home or duplex.

Answer 15

direct investments

Question 16

Many people purchase property in hopes that it will become more desirable and they will be able to sell it for a(n) _____ profit in the future.

Answer 16

handsome

Question 17

Palladium, rhodium, and silver are examples of _____.

Answer 17

precious metals

Question 18

When prices rise quickly, they are said to _____.

Answer 18

soar

Question 19

A(n) _____ is an investment in which a trustee is appointed to hold legal title to a property on behalf of an investor or group of investors.

Answer 19

indirect investments

Question 20

A temporary association of individuals organized to invest in real estate that requires a large amount of funds is an example of a(n) _____.

Answer 20

sydicates

Question 21

A general partner takes complete responsibility for a business, but a limited partner is only ____ for the money he or she has invested.

Answer 21

liable

Question 22

________ are popular with investors thanks in part to ease of storage and durability.

Answer 22

Precious gems

Question 23

Land and buildings that produce rental income are called _____.

Answer 23

commercial property

Question 24

A relatively risk-free real estate investment that is considered a mutual fund and can be purchased from federal agencies is a(n) ______.

Answer 24

participation certificate (PC)

Question 25

Rare coins and works of art are examples of another type of investment, known as ____.

Answer 25

collectables

Question 26

An example of a direct investment is a… A. home mortgage B. Real estate syndicate C. Real estate investment trust D. Ginnie Mae certificate

Answer 26

home mortgage

Question 27

In a syndicate organized as a limited partnership, responsibility for all the partnership's liabilities belongs to the… A. Limited partners B. General partner C. Tenants D. Federal government

Answer 27

general partner

Question 28

An investment in a real estate syndicate can be… A. Depreciable B. Deductible C. Tax-exempt D. Diversified

Answer 28

diversified

Question 29

REIs might invest the participants money in any of the following items except… A. Construction loans B. Financial instruments C. Properties D. Mortgages

Answer 29

Financial instruments

Question 30

Which of the following are examples of participation certificates? A. Maes and Macs B. U.S. Treasury Bills C. REITs D. Real estate syndicates

Answer 30

Maes and Macs

Question 31

Generally, an indirect investment in real estate is… A. easily converted into cash B. a hedge against inflation C. only for the wealthy D. A good tax shelter

Answer 31

a hedge against inflation

Question 32

The price of gold might fall when… A. War threatens B. the government seems unstable C. Countries make peace D. Inflation soars

Answer 32

countries make peace

Question 33

In January 2005, which of the following precious metals was most valuable? A. Gold B. Platinum C. Palladium D. Rhodium

Answer 33

Rhodium

Question 34

A gem’s certificate should list each of the following characteristics except… A. Weight B. Color C. Density D. Clarity

Answer 34

Density

Question 35

Drawbacks of finding collectibles on the internet include the… A. Inability to comparison shop B. Lack of a wide range of sellers C. Inability to examine items for flaws D. Frequently charged buyers commissions

Answer 35

Inability to examine items for flaws