CH13

What is a Mutual Fund?

• A) An investment company that pools funds to invest in securities.

• B) Purchasing properties like residential, commercial, or industrial real estate.

• C) Investments in assets with the expectation of high returns.

• D) Collected investment security that is traded on the market.

Which of the following distinguishes Mutual funds from ETFs?

• A) Mutual funds establish contractual relationships with authorized participants.

• B) Mutual funds put money into one company only.

• C) Mutual fund transactions are processed once daily.

• D) Mutual fund investors buy units.

How are mutual fund profits calculated?

• A) Based on the current share price.

• B) Based on the portfolio’s net asset value (NAV).

• C) Based on the adjusted returns.

• D) Based on the investment style.

Mutual funds are managed by insurance companies that are governed by __.

• A) Bangko Sentral ng Pilipinas (BSP)

• B) Securities and Exchange Commission (SEC)

• C) Department of Finance (DOF)

• D) Federal Deposit Insurance Corp (FDIC)

Which of the following is true about the Sharpe Ratio?

• A) The higher the Sharpe ratio, the lower the return is.

• B) The lower the Sharpe ratio, the lower the return is.

• C) The higher the Sharpe ratio, the higher the return is.

• D) The lower the Sharpe ratio, the higher the return is.

What distinguishes real estate investment from other asset classes like stocks and bonds?

• A) Real estate is liquid and can be easily bought and sold.

• B) Real estate offers ownership of tangible assets such as land and buildings.

• C) Real estate investments don’t provide income opportunities.

• D) Real estate investments are fully dependent on market conditions.

What is the major risk factor when investing in commercial real estate?

• A) Predictable rental income.

• B) High property maintenance costs.

• C) Fluctuating demand and more complex tenant relationships.

• D) Stable and long-term leases.

What is a characteristic of vacation rentals compared to long-term leases?

• A) Vacation rentals typically have lower rental income.

• B) Vacation rentals tend to be located in tourist areas and earn higher rents.

• C) Vacation rentals are always owned by commercial businesses.

• D) Vacation rentals have less tenant turnover than long-term leases.

What is a Real Estate Investment Trust (REIT)?

• A) A type of residential property.

• B) A company that owns, operates, or finances income-generating properties.

• C) A short-term rental property.

• D) A government entity responsible for property tax collection.

What is the key difference between publicly traded REITs and non-traded REITs?

• A) Publicly traded REITs offer higher yields than non-traded REITs.

• B) Publicly traded REITs are bought and sold on stock exchanges; non-traded REITs are not.

• C) Non-traded REITs are less risky than publicly traded REITs.

• D) Publicly traded REITs do not offer dividend distributions.