Products & Their RisksQuestion 76 of 398
An investor wants exposure to real estate that generates income from mortgage interest rather than from owning and renting property. Which product best fits?
a.An equity REIT
b.A mortgage REIT
c.A direct participation program in raw land
d.A UIT of municipal bonds
Explanation
A mortgage REIT invests in real estate loans and mortgage-backed securities, earning income primarily from the interest on those mortgages. An equity REIT, by contrast, owns and operates income-producing properties, deriving income mainly from rents.
Law Reference: Securities Act of 1933Practice all 398 questions free — no signup required.
Related questions on this topic
- A distinguishing feature of a unit investment trust (UIT) is that it:
- When a unit investment trust reaches its predetermined termination date, what typically happens?
- To qualify for favorable tax treatment as a real estate investment trust (REIT), the entity must distribute to shareholders at least:
- In a fixed annuity, who bears the investment risk?
- A variable annuity differs from a fixed annuity primarily because the variable annuity:
- An equity-indexed annuity typically credits interest based on:
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against FINRA Securities Industry Essentials (SIE) Exam · How we review