CFA Practice Question

There are 139 practice questions for this study session.

CFA Practice Question

An investor wishes to diversify her portfolio by including real-estate as she has learned that real estate generally has a low correlation with equities. Which of the following vehicles is NOT a publicly traded real-estate investment opportunity?
A. REITs
B. Real estate limited partnerships.
C. Private equity.
Explanation: As implied by its name, private equity is not traded publicly. It is a vehicle for pooling funds from many investors and investing them in real estate projects in the form of equity, privately held.

User Contributed Comments 8

User Comment
george2006 what about real estate limited partnership?
samco Publicly traded real estate limited partnerships were very popular with investors for a period of time up until 1990.
sbajaj What about comingled funds?
Rotigga Commingled Fund: A fund consisting of assets from several accounts that are blended together. Investors in commingled fund investments benefit from economies of scale, which allow for lower trading costs per dollar of investment, diversification and professional money management.
Sometimes called a "pooled fund." (From Investopedia)
Lamkerst The question is about vehicles that are both (1) non-publicly and (2) real-estate related.

Private equity satisfies (1) but not necessarily (2), for PE maybe equities of private companies.

Best answer is C.
mobandeira I agree to Lamkerst, private equity is not about real state at all :)

Private equity fonds purchase a participation in non-publicly traded companies.
ankurwa10 I still think B is the right answer. the answer seeks to know the real estate related vehicle that IS NOT PUBLICLY TRADEd. that should rule out PE as a viable option at all, instead of being THE OPTION.
gradyf Agreed with Ankurwa10, several PE firms are publically traded so it shouldn't be the answe
You need to log in first to add your comment.