- CFA Exams
- CFA Level I Exam
- Topic 8. Alternative Investments
- Learning Module 4. Real Estate and Infrastructure
- Subject 1. Real Estate Features
CFA Practice Question
Which of the following investments has the greatest liquidity?
B. REIT.
C. Minority stake in privately held firm.
D. Equity stake in early stage venture capital investment.
A. RELP.
B. REIT.
C. Minority stake in privately held firm.
D. Equity stake in early stage venture capital investment.
Correct Answer: B
REITs in this case are the most liquid investment. There are several real estate securities that enable an investor to invest in real estate properties without experiencing the problems associated with illiquidity. These include real estate investment trusts (REITs) and real estate limited partnerships (RELPs). Since RELPs are partnerships and NOT traded on an organization (like a REIT) they have considerably less liquidity than a REIT.
User Contributed Comments 4
| User | Comment |
|---|---|
| 0is4eva | Real Estate Limited Partnership (RELP) = A direct partnership program formed to build new structures and generate income from existing property, or profit from the capital appreciation of undeveloped land. Limited liability. Real Estate Investment Trust (REIT) = REITs invest in real estate or loans secured by real estate, and issue shares in such investments, the shares are traded on the stock market. A REIT is similar to a closed-end mutual fund. |
| aartis | REIT is a close ended mutual fund but the shares are traded in the stock market |
| zeiad | close ended mutual fund but shares are traded in the stock market |
| 923029 | Alot of the downtown properties on big cities are owned by REITS. |