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Q:
The first hedge fund was created in 1949 by:A.Dow Jones.B.William P. Standard.C.Alfred Jones.D.Michael Milken.
Q:
Hedge funds:A.are open about their trading strategies.B.are secretive about their strategies.C.trade using only one brokerage.D.None of the above
Q:
Hedge funds are:A.regulated by the SEC.B.private limited partnerships.C.unregulated by the SEC.D.Both B and C
Q:
A shopping center has annual net operating income of $1,050,000 and a capitalization rate of 8%. What is its value?
Q:
The best time to buy collectibles is when:
A.the bloom is off the market and dealers are overburdened with inventory.
B.there is a weekly story in The Wall Street Journal or BusinessWeek about fortunes being made in the collectible market.
C.the economic outlook is moving from inflation to deflation.
D.the economy is at a peak, headed for a downturn.
Q:
Common date gold coins may trade at ________ their pure bullion value.
A.50-75% of
B.100% of
C.2 to 3 times
D.50 to 100 times
Q:
In evaluating a general partner of a limited partnership, an investor should be sensitive to his or her:
A.experience.
B.possible lawsuits.
C.law degree.
D.A and B
Q:
Which of the following is not a real asset?
A.Mickey Mantle baseball card
B.100 shares of an REIT
C.Gold bullion
D.An apartment complex
Q:
Real estate investment trusts are similar to mutual funds or investment companies because:
A.they do not trade on organized exchanges, but do trade over-the-counter.
B.they pool investors' funds.
C.they are both limited partnerships.
D.All of the above
Q:
Equity participation:
A.is popular in commercial real estate.
B.lets the lender provide borrowed capital.
C.lets the lender provide part of the equity or ownership funds.
D.All of the above
Q:
Real assets are:
A.tangible assets that may be seen, felt, held, or collected.
B.paper assets that are usually traded over an exchange.
C.also known as financial assets.
D.not diversifiable.
Q:
Advantages of real assets over other types of investments include that:
A.they provide a good hedge against inflation.
B.they tend to be negatively correlated with other types of investments.
C.they provide personal pleasure to the investor.
D.All of the options
Q:
The best time to buy collectibles such as art, antiques, musical instruments, and the like is when:
A.the stock market is down.
B.no one else seems very interested.
C.a period of high inflation begins to level off.
D.None of the above
Q:
Disadvantages of owning diamonds include all of the following EXCEPT:
A.they are very expensive to store and insure.
B.there are usually high dealer mark ups.
C.they are lightweight and easily transported.
D.there is a lack of liquidity.
Q:
Which of the following statements is NOT true?
A.Like gold, silver is a good hedge against inflation
B.Silver has extensive industrial and commercial uses
C.The supply of silver immediately increases with the price of silver
D.All of the above are true
Q:
Which of the following allow the individual to invest in gold without actually owning gold?
A.Gold stock
B.Gold futures
C.Options on gold futures
D.All of the above
Q:
The gold coin that trades at the smallest premium over its pure bullion value is:
A.gold bullion coins.
B.common date gold coins.
C.old and rare coins.
D.the American double eagle.
Q:
Historically, the best time to own gold and silver is:
A.when the stock market is declining.
B.when there is significant political instability or anticipation of war.
C.during periods of high inflation.
D.All of the above
Q:
In recent times, suppliers of second mortgages have often been:
A.buyers of real estate.
B.Real Estate Investment Trusts (REITs).
C.sellers of real estate.
D.real estate brokers.
Q:
Which of the following is NOT a characteristic of real estate investment trusts?
A.Similar to mutual funds, they pool investor funds and invest directly in real estate or make construction or mortgage loans
B.They provide a tax shelter to wealthy investors
C.It is the most liquid type of real estate investment
D.All of the above are characteristics of REITs
Q:
The most significant advantage(s) of limited partnerships is(are):
A.limited liability of limited partners, and direct assignment of profits and losses to the partners.
B.unlimited liability of general partners.
C.favorable tax treatment of capital gains and management participation features.
D.None of the above
Q:
Which of the following is a disadvantage of a regular partnership investment arrangement?
A.It is the simplest legal arrangement
B.There is a well-defined center of responsibility
C.The liability of each investor is not limited to his or her investment
D.All of the above are advantages
Q:
A real estate loan that brings in a new lender is the:
A.adjustable rate mortgage.
B.graduate payment mortgage.
C.second mortgage.
D.None of the above
Q:
In a(n) ____ arrangement, the borrower may end up making payments to cover not only the loan amortization, but also interest on deferred interest from an earlier period.
A.Graduated payment mortgage
B.Shared appreciation mortgage
C.Adjustable-rate mortgage
D.More than one of the above
Q:
Which is not an approach to real estate valuation?
A.Cost approach
B.Comparative sales value
C.Price-earnings ratio
D.Income approach
Q:
Real assets in comparison to financial assets are more likely to produce:
A.superior returns.
B.high liquidity.
C.psychic pleasure.
D.deflationary benefits.
Q:
Depreciation
A.on residential real estate property can be written off over 31 1/2 years.
B.on commercial real estate can be written off over 39 years.
C.can be accelerated for commercial real estate.
D.None of the above
Q:
Real estate is a particularly good investment among real assets because of:
A.depreciation write-offs.
B.appreciation in value due to price appreciation.
C.long-term financing.
D.All of the above
Q:
Real assets may be effective for portfolio diversification because:
A.they provide an effective hedge against deflation.
B.they are perceived as a safe haven for investments.
C.real and financial assets are less positively correlated than financial assets alone.
D.None of the above
Q:
Compared to other investments, which of the following is not a disadvantage of investing in real assets?
A.The initial amount of money is usually large
B.The absence of a relatively efficient, liquid market
C.High transaction and incidental costs
D.All of the above are disadvantages
Q:
Real assets often increase in value when:
A.higher levels of inflation are anticipated.
B.the stock market is advancing.
C.the public is confident about world events.
D.bond prices are advancing.
Q:
Collectible items are considered to be real assets.
Q:
Limited liability is particularly important in real estate because mortgage debt obligations may exceed the net worth of participants.
Q:
The negative impact of tax reform on real estate was partly associated with declining economic conditions in various sections of the country during the late 1980s and early 1990s.
Q:
Perhaps the largest disadvantage of real assets is the absence of large, liquid, and relatively efficient markets.
Q:
Real assets may offer an opportunity as an inflation hedge because inflation means higher replacement costs for real estate, precious metals, and other physical items.
Q:
Silver has more industrial and commercial uses than gold.
Q:
A negative aspect of diamond investments is the relatively high cost of buying and selling them.
Q:
Diamonds have enjoyed an enviable record of no price declines over the past few years.
Q:
Gold ownership is considered a hedge against inflation.
Q:
A limited partnership can be either private or public in nature.
Q:
In a blind pool arrangement, funds are provided to the general partner to select properties for investment.
Q:
Under an equity participation arrangement, the lender not only provides the borrowed capital, but part of the equity ownership funds as well.
Q:
No one in a limited partnership arrangement has unlimited liability.
Q:
A shared appreciation mortgage usually has an interest rate below current market rates.
Q:
Graduated payment mortgages may require payment of interest on accumulated, unpaid interest.
Q:
A variable-rate mortgage allows the borrower to select a different rate of interest depending on economic conditions.
Q:
Twin factors that make real estate an attractive investment are tax write-offs and appreciation from inflation.
Q:
The time period over which real estate is financed is almost always the same period over which depreciation is taken.
Q:
The only tax benefit for real estate owners is depreciation allowances.
Q:
A major advantage of real estate over other real assets is its liquidity.
Q:
A problem with real estate investments is that all require direct management by the owner.
Q:
Dealer spreads on real assets tend to be less than on stocks or bonds.
Q:
There is often a place for real assets in a truly diversified portfolio.
Q:
Movements between various real and monetary assets are less positively correlated than those for monetary assets alone.
Q:
Evidence shows real assets to be an inflation hedge.
Q:
The price of diamonds around the world is controlled not by economic factors, but by one monopolistic company.
Q:
Under a graduated payment mortgage, annual payments are adjusted based on the new existing interest rate.
Q:
The prices of gold and silver tend to be positively correlated with the stock market.
Q:
REITs are very similar to mutual funds or investment companies.
Q:
Real estate investment trusts provide a large, liquid investment alternative to small investors.
Q:
In a real estate syndicate, a general partner has limited liability.
Q:
Under some mortgage arrangements, the lender may loan the funds at a rate well below the current market rate.
Q:
The value of the comparable sales approach to real estate valuation is that it is highly theoretical.
Q:
The value of real assets moves closely with the value of financial assets, and therefore they provide effective portfolio diversification.
Q:
While providing an effective hedge against inflation, real assets do not have particularly efficient liquid markets.
Q:
a) You invest in the Canadian Equity market and you lose 20% (quoted in Canadian dollars). In the meantime, the United States dollar declines by 5% against the Canadian dollar. What is your percentage gain or loss, translated into dollars?
b) If the United States dollar declines by 10% against the Canadian dollar, what would be your percentage gain or loss, translated into dollars?
Q:
Assume you invest in the European Equity Market and have a 15% return (quoted in Euros).a) If during this period the euro appreciated by 10% against the dollar, what would be your actual return, translated into United States dollars?b) What if the euro declined by 10% against the dollar, what would your actual return be, translated into dollars?c) Recompute the answer based on a 15% decline in the euro against the dollar.
Q:
Developed countries' stock market returns have correlations to the U.S. market that:A.are stable over the years.B.seem to maintain their relative rank order to each other compared to the U.S.C.are consistently correlated to the U.S. markets at less than 1.00.D.as a group, have seen their correlation decline over the last 42 years.
Q:
There are several reasons why some analysts think that financial markets have become more highly correlated in recent years. Which one does not belong?
A.The development of a global economy has made companies and those economies more connected and less diverse
B.The new European Central Bank has coordinated economic policy across the European Union, making that region more coordinated
C.U.S. companies operating abroad, like Coca Cola, McDonalds, and ExxonMobil, are highly correlated with U.S. markets
D.Every time we have a world event such as September 11, 2001, a currency crisis, or a market collapse somewhere, the international stock markets seem to fall together, making them look like they are highly correlated
Q:
Emerging markets have the following characteristics:
A.the 20 largest U.S. companies added together by market capitalization are bigger than any emerging market capitalization except China.
B.the International Monetary Fund separates developed and emerging markets by the market capitalization of the respective markets.
C.liquidity would be the same as a small company traded on the NASDAQ stock market.
D.continuous auction markets.
Q:
When looking at the list of countries in the emerging market list,
A.China has the biggest market capitalization.
B.Korea has the biggest market capitalization.
C.Russia has the biggest market capitalization.
D.Taiwan has the biggest market capitalization.
Q:
The market capitalization of developed countries from 2005 to 2009:
A.decreased by about $1.6 trillion, or approximately 4.5%.
B.decreased by about $13 trillion because of the currency crisis in Asia during 1987-98.
C.was relatively flat because of the U.S. stock market downturn of 2000-2002.
D.increased by about $13 trillion because of the inclusion of China, Korea, and Russia into the list of developed countries.
Q:
Which of the following reasons might explain why international investing might offer diversification benefits?
A.Companies operating in different countries will be affected differently by international events such as crop failures, energy prices, wars, tariffs, etc.
B.Since the introduction of the euro, European and U.S. markets have a tendency to move in the same direction on an annual basis
C.World markets are highly correlated to the U.S. market since the U.S. is the engine of economic growth around the world
D.U.S. companies operating in foreign countries automatically provide the investor with diversification against foreign currency fluctuations
Q:
Which of the following are benefits of diversification into foreign securities?
A.Diversification offers opportunities for higher returns than a single-country portfolio
B.Diversification reduces portfolio volatility
C.Returns between countries are not highly correlated
D.All of the above
Q:
Indirect means of participating in foreign investments include purchasing:
A.exchange-traded funds.
B.open-end mutual funds specializing in foreign securities.
C.closed-end mutual funds.
D.All of the options
Q:
All of the following are obstacles to foreign investing, except:
A.political risks associated with foreign nations.
B.language barriers.
C.diversification difficulties.
D.market efficiency.
Q:
Multinational corporations are firms that:
A.are located in one country and invest in another.
B.operate in one country and export those goods to other countries.
C.operate in several countries.
D.have clients in several countries.
Q:
An investor can earn a higher return in foreign markets than in the U.S. because:
A.a number of countries have superior real GDP growth rates compared to the U.S.
B.of foreign competitiveness in traditional U.S. products such as automobiles and steel.
C.of the fact that many nations enjoy a higher savings rate than the United States, which leads to capital formation and potential investment opportunity.
D.All of the above
Q:
An advantage to investing in foreign markets is:
A.diversification.
B.that it is easy to profit from foreign currency exchange.
C.that there is more potential to profit from foreign markets than domestic markets.
D.that there is less risk involved in investing in foreign markets.