CFA Practice Question

There are 139 practice questions for this study session.

CFA Practice Question

Which of the following statements is most accurate?

A. An equity REIT invests in properties such as apartments and hotels.
B. A REIT is similar to an open-end fund.
C. In a RELP, all parties have limited liability.
D. A mortgage REIT is a type of mortgage-backed security (MBS).
Correct Answer: A

A REIT (real estate investment trust) is like a closed-end fund. It raises its capital by an initial sale of shares to investors. It then invests the capital in various types of real estate. In a RELP (real estate limited partnership), the general partners assume unlimited liability while the investors have limited liability. A mortgage REIT is a fund that makes construction and mortgage loans; it is not a type of MBS.

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