This week’s study question from the Solomon Online Exam Simulator question database is now available.
Which of the following statements concerning REITs (real estate investment trusts) and RELPs (real estate limited partnerships) are true?
I. REITs pass through income, but not losses, to shareholders
II. RELPs pass through both income and losses to shareholders
III. REITs are highly illiquid
IV. RELPs are highly liquid
A. I and III
B. II and IV
C. I and II
D. I, II, III and IV
Correct Answer: C. I and II
Rationale: Statements I and II are both true, but statements III and IV are reversed. Limited partnership investments are almost always illiquid, while REITs are highly liquid.
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