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1.
One disadvantage of investing in a real estate investment trust is ______.
Low returns due to decreased mortgage interest rates. REITs that invest in mortgage loans can post poor performances following drops in interest rates.
2.
The Tax Reform Act of 1986 expanded the powers of real estate investment trusts by _______.
Allowing them to manage and operate real estate developments. Prior to the Tax Reform Act of 1986, REITs could own real estate, but they could not manage or operate it.
3.
You are most likely to be able to obtain REITs from _______.
An investment broker. You can buy REITs from the same venues where you might obtain common stock and mutual funds.
4.
A real estate investment trust is most likely to focus on the area of _______.
Equity. More than 90 percent of REITs invest in equity; smaller numbers invest in mortgage loans or a combination of equity and mortgage loans.
5.
One risk of holding a lot of mortgage loans in a REIT is that _______ can affect their performance.
Fluctuating interest rates. Changing interest rates on mortgage loans can affect performance negatively.
