Jefferson Davis has invested in something that acts like a mutual fund and that invests in properties all over the country. He knows there are federal laws that require this type of investment to distribute at least 90 percent of the income to shareholders and that requires there be at least 100 shareholders. What type of investment has Jefferson made?

Question

Quizplus · Accepted Answer

Jefferson has invested in a Real Estate Investment Trust (REIT), which is a type of investment that pools money from multiple investors to purchase properties. REITs are required by federal law to distribute at least 90% of their income to shareholders and must have at least 100 shareholders. Option A is incorrect as foreclosures are properties that have gone through the process of being repossessed by a lender. Option C is incorrect as limited partnerships typically involve only a few investors and do not have the same legal requirements as REITs. Option D, participation certificates, refers to a type of security that represents an interest in a loan or pool of loans and is not related to real estate investments. Option E, direct investment, refers to an individual investing directly in a property and would not involve the legal requirements and structure of a REIT.

Jefferson Davis Has Invested in Something That Acts Like a Mutual