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Series 7 Top Off Exam questions with 100% correct answers
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Series 7 Top Off Exam questions with 100% correct answers
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Series 7 Top Off ExamReal Estate Investment Trust (REIT) - correct answer ✔✔-No Taxation on income if 90% of it is distributed
-Pass-through income, NOT losses
- subject to registration
-secondary market
-marginable
*** Attractive to investors seeking current income.
1. Mortgage/Debt REIT
2. Equity REIT
3. Hybrid REIT - correct answer ✔✔1. Invests in mortgage-backed securities
2. owns and operates income-producing real estate
3. combination of mortgage and equity
Direct Participation Program (DPP) - correct answer ✔✔A business venture structured to pass through
income and tax losses to investors. Commonly structured as a limited partnership
- Subchapter S corporation
-Joint Ventures
-General Partnership
-Limited Partnership
Advantages of a Limited Partnership - correct answer ✔✔-Pass-through income and losses
-tax benefits - 20% deductible - ordinary income
, -Limited Liability
Disadvantages of a Limited Partnership - correct answer ✔✔ILLIQUID
lack of control
**Don't invest solely for tax reasons
Raw Land (Real estate Programs) - correct answer ✔✔speculation on land appreciation
VERY RISKY
New Construction (Real estate Programs) - correct answer ✔✔Risks of overbuilding, costs overruns, long
duration
Existing (Real estate Programs) - correct answer ✔✔LESS RISKY
existing cash flow
Low income - government assisted (Real estate Programs) - correct answer ✔✔LEAST RISKY
beneficial potential tax credits
little chance of appreciation
high maintenance costs
Oil and Gas Programs - correct answer ✔✔1. Exploratory (Wildcatting) - High Risk
2. Balanced - combination of exploratory and developmental
3. Developmental - LESS RISKY - drilling near an existing field
4. Income - LEAST RISKY - purchase of existing wells
Business Development Company (BDC) - correct answer ✔✔Raises money by selling securities to
investors. A BDC uses the money it raises to invest in private companies, SMALL DEVELOPING
BUSINESSES, and financially troubled companies. Most BDCs are ILLIQUID because they trade on
exchanges, and are NOT TAXED IF they distribute at least 90% of their income to their investors. Most
have investment objective of providing CURRENT INCOME AND CAPITAL APPRECIATION
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