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Stocks 502: Unconventional Equities

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1.
Why do nearly all royalty trusts have above-average yields?
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They are required to pay out essentially all of their cash flow as distributions. This results in relatively large yields for investors.
2.
Cash flows from master limited partnerships tend to be _______.
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Stable. MLPs tend to be be very stable and produce consistent cash flows over time.
3.
What will eventually happen to the distributions that royalty trusts pay their investors?
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They will disappear. Resources are finite; therefore, they will run out eventually.
4.
Real estate investment trusts specialize by _______.
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Type of property. For example, they may specialize in offices, malls, hotels, or many other property types.
5.
Which of the following is true regarding the tax treatment of master limited partnerships?
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The owner might have to file tax returns in the states where the partnership operates. MLP unitholders pay regular income tax annually on their share of the partnership's net income.