Investment VehiclesQuestion 86 of 100
A real estate investment trust (REIT) that qualifies for favorable tax treatment must generally:
a.Retain all of its income
b.Distribute a large majority of its taxable income to shareholders
c.Invest only in government bonds
d.Avoid paying any dividends
Explanation
A REIT must distribute a large majority of its taxable income, generally at least 90 percent, to shareholders to qualify for pass-through tax treatment. This produces relatively high dividend income for investors. REITs provide real estate exposure without direct property ownership.
Practice all 100 questions free — no signup required.
Related questions on this topic
- A put option is generally used by an investor who:
- A variable annuity's separate account value during the accumulation phase:
- A fixed annuity is characterized by:
- An investor seeking exposure to a diversified basket of bonds with professional management and daily liquidity would MOST likely choose:
- Treasury securities are generally considered to have virtually no:
- A convertible bond gives the holder:
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against NASAA Series 66 Uniform Combined State Law Exam · How we review