- 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
All of the following statements about real estate investment trusts (REITs) are generally true EXCEPT:
B. REITs yield a return at least 1-2 percentage points above money market funds and about the same return as high-grade corporate bonds.
C. REITs are required by law to pay out 90% of their income as dividends.
D. REITs must keep at least 75% of their assets in real estate investments.
A. The shares of REITs are traded only on the New York Stock Exchange.
B. REITs yield a return at least 1-2 percentage points above money market funds and about the same return as high-grade corporate bonds.
C. REITs are required by law to pay out 90% of their income as dividends.
D. REITs must keep at least 75% of their assets in real estate investments.
Correct Answer: A
User Contributed Comments 7
| User | Comment |
|---|---|
| stefdunk | I thought the law required REITS to pay out 90%. Can someone please verify this? |
| johnny | This is not explained in the textbook so why worry? |
| johntan1979 | stefdunk is right. It WAS 95% but has been lowered to 90%. On December 17, 1999, US Congress and the President signed into law the REIT Modernization Act (RMA), which goes into effect in 2001 and includes the change in payout requirements. |
| Shaan23 | How do you guys know this crap...im not bothering. |
| schweitzdm | Yes it's 90%. The only reason I know is because I wrote a report on $AMT. Fun fact: if they fail to pay enough out as a dividend then they face income taxes. |
| khalifa92 | google dude. |
| 923029 | Key word here lads is 'Only' on the NYSE. REITS can be traded on other exchanges as well. |