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1.
What will eventually happen to the distributions that royalty trusts pay their investors?
They will disappear. Resources are finite; therefore, they will run out eventually.
2.
If you invest in a master limited partnership that is held in a retirement account, you will not need to pay taxes on your earnings.
False. You may have to pay taxes anyway. Earnings are not generally tax-deferred.
3.
Real estate investment trusts specialize by _______.
Type of property. For example, they may specialize in offices, malls, hotels, or many other property types.
4.
Which of the following is not an advantage of royalty trusts?
Stable cash flows. Cash flows from royalty trusts are not predictable. Royalty trusts are affected by swings in production levels and commodity prices.
5.
The prices of MLP units often change in conjunction with changes in _______.
Interest rates. Since MLP cash distributions are so steady, many investors treat them like bonds. Thus, when interest rates rise, bond and MLP prices tend to fall. This relationship is not perfect, but it generally holds over time.
