Question 1

Advantages of real estate investing include​

Accepted Answer

Real estate investing often involves significant financial risk, complexity, and a substantial time commitment to manage properties effectively, making none of the listed options correct advantages.

Question 2

A disadvantage of real estate investment is​

Accepted Answer

Real estate investment involves financial risk since property values can fluctuate, large initial investment is required to purchase property, and the investment is often illiquid, making it difficult to quickly sell the property and convert the investment into cash. Therefore, all of these are considered disadvantages of real estate investment.

Question 3

An effective way to estimate the value or asking price of a real estate investment is by using the​

Accepted Answer

The discounted cash-flow method is a commonly used approach to estimating the value or asking price of a real estate investment. This method takes into account the expected cash flows from the property over a certain period of time, and discounts them back to their present value using a discount rate that takes into account the risk associated with the investment. This allows investors to determine how much they should be willing to pay for the property in order to achieve their desired return on investment.

Question 4

The prudent investor limits high-risk investments to less than ____ percent of his or her overall investment mix.

Accepted Answer

The prudent investor typically limits high-risk investments to less than 10 percent of their overall investment mix to maintain a balanced and diversified portfolio that mitigates risk while seeking returns.

Question 5

Which is not a characteristic of a true timeshare arrangement?​

Accepted Answer

A true timeshare arrangement does not grant legal real estate ownership to the purchaser. Rather, it provides a long-term lease or a right-to-use purchase. Option A and B are true characteristics of timeshare arrangements, while option C may also be possible in certain situations where the property is subject to foreclosure or bankruptcy.

Question 6

The best-quality precious gems and metals are sold by​

Accepted Answer

The answer of The best-quality precious gems and metals are...

Question 7

Investors choose derivatives​

Accepted Answer

Investors may choose derivatives to either reduce risk by hedging against losses or take on additional risk by speculating. Derivatives, such as options and futures contracts, provide investors with flexibility in managing their financial risk, allowing them to customize their investments according to their preferences and desired outcomes. By hedging against losses, investors can protect themselves from potential market downturns, while by speculating, they can potentially earn significant profits from market movements in their favor. Hence, both options are valid reasons why investors may choose derivatives.

Question 8

Misty and Jason rented out their lake house for five days and were paid $800.Assuming this is their only rental income and they are in the 28 percent marginal tax bracket,their tax liability on this $800 would be​

Accepted Answer

The correct answer is D) $0. This is because the IRS allows homeowners to rent out their property for up to 14 days per year without having to report the income on their tax return. Since Misty and Jason rented out their lake house for only five days, they do not have to report this income or pay taxes on it.

Question 9

Which of the following is not correct about collectibles?​

Accepted Answer

Scams and frauds are unfortunately common in the collectibles industry, so it is important for investors to do their research and only work with reputable dealers.

Question 10

Projected gross income for an income-producing real estate investment is computed as​

Accepted Answer

The answer of Projected gross income for an income-producing real...

Question 11

The advantages of real estate investing do not include

Accepted Answer

Real estate investing typically has lower liquidity compared to other investments such as stocks and bonds. This means that it may take longer to convert the investment into cash if needed. Therefore, real estate investing does not have a high level of liquidity as an advantage.

Question 12

____ are cultural artifacts that have value because of their beauty,age,scarcity,or popularity.

Accepted Answer

Collectibles are cultural artifacts that hold value due to their aesthetics, age, rarity, or popularity. Options, calls, and puts are all terms used in the financial industry and are not related to cultural artifacts.

Question 13

____ would not be included in a list of high-risk investments.

Accepted Answer

Treasury securities are considered to be low-risk investments due to their backing by the US government. Gold, rare coins, and diamonds can all fluctuate in value and carry higher levels of risk.

Question 14

When one trades equity in one property for equity in a similar property without receiving cash,he or she pays

Accepted Answer

This is known as a like-kind exchange or a 1031 exchange, and under current tax law, no income taxes are due in the year of the exchange as long as certain criteria are met. This allows investors to defer paying taxes on their gains until they sell the property for cash, and potentially avoid paying taxes altogether if they continue to exchange properties in this manner.

Question 15

People who want to invest speculatively in currencies can do so on the ____ exchange.

Accepted Answer

The forex (foreign exchange) market is specifically designed for trading currencies, making it the best option for those who want to invest speculatively in currencies. The other options (foreign stock, NASDAQ, and money exchanges) do not focus solely on currency trading.

Question 16

Alberto bought commercial property in 1980 for $50,000.In 2011,he traded it for similar property valued at $150,000 and received $10,000 in cash.His taxable income from this transaction in 2014 would be​

Accepted Answer

The taxable income from this transaction would be the $10,000 in cash received, as this is considered boot in the context of a like-kind exchange under U.S. tax law. The main principle of a like-kind exchange (also known as a 1031 exchange) is that if you exchange real estate used for business or investment purposes for another property of like kind, you do not recognize a gain or loss until you sell or otherwise dispose of the new property. However, if you also receive cash (boot), the cash is immediately taxable to the extent of the gain realized on the exchange. In this case, the gain realized would be the difference in value between the new property and the old property plus cash received, but only the cash received ($10,000) is immediately taxable.

Question 17

Jodi has a duplex with operating income of $6,000 before depreciation.If the duplex cost $150,000 including $40,000 land value,how much is Jodi's taxable income after depreciation?​

Accepted Answer

The answer of Jodi has a duplex with operating income...

Question 18

______ is a peer-to-peer experimental decentralized digital cash currency based on an open source cryptographic protocol.

Accepted Answer

The description matches that of bitcoin, which is a decentralized digital currency based on a cryptographic protocol. Forex is a market for foreign exchange trading, bullion refers to gold or silver bars, and a commodity futures contract is an agreement to buy or sell a specific commodity at a set price at a future point in time. None of these match the description given.

Question 19

While worldwide demand for precious metals and gems certainly exists,the ones who make the profits on these investments are

Accepted Answer

Professional traders often have the expertise, resources, and networks to buy and sell precious metals and gems at opportune times, making significant profits from these transactions.

Question 20

An option is a contract that
All of these.

Accepted Answer

An option contract gives the holder the right to buy or sell a specific asset at a predetermined price within a specified time period. Therefore, all of the choices are correct.

Quiz 16: Real Estate and High-Risk Investments

Advantages of real estate investing include​

A disadvantage of real estate investment is​

An effective way to estimate the value or asking price of a real estate investment is by using the​

The prudent investor limits high-risk investments to less than ____ percent of his or her overall investment mix.

Which is not a characteristic of a true timeshare arrangement?​

The best-quality precious gems and metals are sold by​

Investors choose derivatives​

Misty and Jason rented out their lake house for five days and were paid $800.Assuming this is their only rental income and they are in the 28 percent marginal tax bracket,their tax liability on this $800 would be​

Which of the following is not correct about collectibles?​

Projected gross income for an income-producing real estate investment is computed as​

The advantages of real estate investing do not include

____ are cultural artifacts that have value because of their beauty,age,scarcity,or popularity.

____ would not be included in a list of high-risk investments.

When one trades equity in one property for equity in a similar property without receiving cash,he or she pays

People who want to invest speculatively in currencies can do so on the ____ exchange.

Alberto bought commercial property in 1980 for $50,000.In 2011,he traded it for similar property valued at $150,000 and received $10,000 in cash.His taxable income from this transaction in 2014 would be​

Jodi has a duplex with operating income of $6,000 before depreciation.If the duplex cost $150,000 including $40,000 land value,how much is Jodi's taxable income after depreciation?​

______ is a peer-to-peer experimental decentralized digital cash currency based on an open source cryptographic protocol.

While worldwide demand for precious metals and gems certainly exists,the ones who make the profits on these investments are

An option is a contract that All of these.

Advantages of real estate investing include

A disadvantage of real estate investment is

An effective way to estimate the value or asking price of a real estate investment is by using the

Which is not a characteristic of a true timeshare arrangement?

The best-quality precious gems and metals are sold by

Investors choose derivatives

Misty and Jason rented out their lake house for five days and were paid $800.Assuming this is their only rental income and they are in the 28 percent marginal tax bracket,their tax liability on this $800 would be

Which of the following is not correct about collectibles?

Projected gross income for an income-producing real estate investment is computed as

Alberto bought commercial property in 1980 for $50,000.In 2011,he traded it for similar property valued at $150,000 and received $10,000 in cash.His taxable income from this transaction in 2014 would be

Jodi has a duplex with operating income of $6,000 before depreciation.If the duplex cost $150,000 including $40,000 land value,how much is Jodi's taxable income after depreciation?