REAL 4000 EXAM 4 NCPQS QUESTIONS WITH
100% CORRECT ANSWERS!!
There are a set of restrictive conditions that REITs must satisfy on an ongoing
basis in order to maintain their special tax status. All of the following
statements regarding the main restrictions are false EXCEPT:
a. no five investors can own more than 10 percent of a REIT's shares
b. a REIT must distribute at least 75% of its taxable income to shareholders in
the form of dividends
c. at least 75 percent of the value of a REIT's assets must consist of real estate
assets
d. at least 50 investors must own a REIT's shares Answer - C. at least 75
percent of the value of a REIT's assets must consist of real estate assets
True/False
At the end of 2015, commercial banks and other financial institutions
collectively owned $15 billion in commercial real estate equity. The vast
majority of these holding are the result of indirect investment through real
estate securities. Answer - False; the vast majority if these holdings are Real
estate obtained as a result of borrower default and foreclosure.
True/False
, The limited partnership ownership form requires cash flows to be allocated to
each shareholder in proportion to his or her ownership of the entity, thereby
preventing special allocations to multiple classes of investors. Answer - False; S
Corp
In contrast to public markets, private markets are characterized by individually
negotiated transactions that take place without the aid of a centralized market.
Therefore, private markets will generally have
a. low transaction costs and high liquidity
b. high transaction costs and low liquidity
c. low transaction costs and low liquidity
d. high transaction costs and high liquidity Answer - b. high transaction costs
and low liquidity
Given the following information, calculate the funds from operation (FFO): net
income: $1,200,000; gains/losses from infrequent and unusual events: $0;
amortization of tenant improvements: $120,000; amortization of leasing
expenses: $75,000; depreciation (real property): $2,675,000 Answer -
4,070,000
True/False
A fixture is an object that formerly was personal property but has become real
property. Of the four rules for determining whether an object has become a
fixture, character of the article and manner of adaptation is the most dominant
rule (i.e., if there is a conflict, the rule that prevails). Answer - False; intention
of parties
100% CORRECT ANSWERS!!
There are a set of restrictive conditions that REITs must satisfy on an ongoing
basis in order to maintain their special tax status. All of the following
statements regarding the main restrictions are false EXCEPT:
a. no five investors can own more than 10 percent of a REIT's shares
b. a REIT must distribute at least 75% of its taxable income to shareholders in
the form of dividends
c. at least 75 percent of the value of a REIT's assets must consist of real estate
assets
d. at least 50 investors must own a REIT's shares Answer - C. at least 75
percent of the value of a REIT's assets must consist of real estate assets
True/False
At the end of 2015, commercial banks and other financial institutions
collectively owned $15 billion in commercial real estate equity. The vast
majority of these holding are the result of indirect investment through real
estate securities. Answer - False; the vast majority if these holdings are Real
estate obtained as a result of borrower default and foreclosure.
True/False
, The limited partnership ownership form requires cash flows to be allocated to
each shareholder in proportion to his or her ownership of the entity, thereby
preventing special allocations to multiple classes of investors. Answer - False; S
Corp
In contrast to public markets, private markets are characterized by individually
negotiated transactions that take place without the aid of a centralized market.
Therefore, private markets will generally have
a. low transaction costs and high liquidity
b. high transaction costs and low liquidity
c. low transaction costs and low liquidity
d. high transaction costs and high liquidity Answer - b. high transaction costs
and low liquidity
Given the following information, calculate the funds from operation (FFO): net
income: $1,200,000; gains/losses from infrequent and unusual events: $0;
amortization of tenant improvements: $120,000; amortization of leasing
expenses: $75,000; depreciation (real property): $2,675,000 Answer -
4,070,000
True/False
A fixture is an object that formerly was personal property but has become real
property. Of the four rules for determining whether an object has become a
fixture, character of the article and manner of adaptation is the most dominant
rule (i.e., if there is a conflict, the rule that prevails). Answer - False; intention
of parties
