Question: Fred Smith, your client, has consulted you regarding increasing the overall yield on his portfolio while simultaneously reducing his risk exposure to the stock market.

Fred Smith, your client, has consulted you regarding increasing the overall yield on his portfolio while simultaneously reducing his risk exposure to the stock market. You have suggested real estate investment trusts

(

REITs

)

and explain that there are several different kinds of REITs. Which of the following accurately describe the characteristics of equity REITs?

Earn rental income from leasing properties they own

Earn interest income from mortgages on real estate properties

Are designed to be liquidated in a specific future year

Are similar to open

-

end mutual funds

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