CFA Practice Question

There are 139 practice questions for this study session.

CFA Practice Question

Equity real estate investment trusts are evaluated using common stock analysis techniques because:
A. REITs trade on stock exchanges and over-the-counter markets as stocks do.
B. real estate markets tend to move in tandem with stock markets over time.
C. they offer a return in the form of an ongoing stream of income with the potential for capital appreciation.
Explanation: Equity REITs are valued using stock valuation techniques because they offer return streams that are similar in nature to those offered by equities, i.e., income and price appreciation.

User Contributed Comments 1

User Comment
0is4eva REITs issue shares that are traded on a stock market, and invest in various types of real estate, thus aggregating individual investors and providing easy access to real estate and diversification within real estate. Mortgage REITs are more like bond investments, equity REITs invest primarily in commercial and residential properties using leverage. The total return on a REIT is made up of income paid to shareholders as well as of the stock market appreciation of the REIT share price. Various REIT indexes are used to proxy the average total return on real estate investments.
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