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Multiple Choice
An example of a real estate asset that trades in the public equity market is a(n):
A
Direct ownership of an apartment building
B
Mortgage-backed security
C
Real Estate Investment Trust (REIT)
D
Private equity fund
Verified step by step guidance
1
Understand the concept of a Real Estate Investment Trust (REIT): A REIT is a company that owns, operates, or finances income-generating real estate. It allows investors to buy shares in real estate portfolios, which may include commercial properties, apartments, or other real estate assets.
Differentiate between the options provided: Direct ownership of an apartment building refers to private ownership and is not traded in public equity markets. Mortgage-backed securities are debt instruments backed by real estate loans, not equity investments. Private equity funds are investment vehicles that are not publicly traded.
Recognize that REITs are publicly traded entities: REITs are listed on stock exchanges, making them accessible to individual investors who can buy and sell shares like any other publicly traded stock.
Understand why REITs are the correct answer: REITs provide a way for investors to gain exposure to real estate assets without direct ownership, and they are specifically designed to trade in public equity markets.
Conclude that REITs are the example of a real estate asset that trades in the public equity market, as opposed to the other options provided, which do not meet this criterion.