### Why are real estate properties considered illiquid assets? - [ ] They can be converted into cash instantly. - [ ] They involve simple transaction processes. - [x] They cannot be quickly converted into cash without significant price concessions. - [ ] They are typically inexpensive. > **Explanation:** Real estate properties are considered illiquid assets because they cannot be quickly sold or converted into cash without accepting a reduced price due to a lack of ready buyers. ### What are common examples of illiquid assets in real estate? - [ ] Stocks and bonds - [x] Residential property and commercial real estate - [ ] Savings accounts - [ ] Mutual funds > **Explanation:** Residential properties and commercial real estate are common examples of illiquid assets due to the time and cost involved in selling them. ### How much can transaction costs typically range when selling real estate? - [ ] 0-1% - [ ] 1-2% - [x] 3-10% - [ ] 10-20% > **Explanation:** Transaction costs when selling real estate typically range from 3–10%, including agent commissions, closing costs, and possible repair expenses. ### Which factor does NOT contribute to real estate being an illiquid asset? - [ ] Lengthy sales processes - [ ] High transaction costs - [ ] Market volatility - [x] Immediate convertibility to cash > **Explanation:** Immediate convertibility to cash is not a factor because it renders an asset liquid. The factors contributing to real estate being illiquid include lengthy sales processes, high transaction costs, and market volatility. ### What are the potential benefits of owning illiquid real estate assets? - [x] Long-term value appreciation - [ ] Rapid cash conversion - [ ] Low holding costs - [ ] High liquidity > **Explanation:** The potential benefits of owning illiquid real estate include long-term value appreciation and rental income, although these assets do not offer rapid cash conversion. ### What might a property owner have to do to sell an illiquid asset quickly? - [ ] Wait indefinitely - [ ] Keep the price high - [x] Substantially reduce the price - [ ] Ignore market conditions > **Explanation:** A property owner might have to substantially reduce the price to sell an illiquid asset quickly, as there may not be an immediate market of willing buyers at the desired price. ### In which type of market can real estate become more liquid? - [ ] Quiet market - [x] Hot market with high demand - [ ] Over-saturated market - [ ] Depressed market > **Explanation:** In a hot market with high demand, real estate can become more liquid because the increased buyer interest can lead to quicker sales. ### How can you measure the liquidity of a real estate asset? - [x] By evaluating how quickly it can be converted to cash without a significant loss in value. - [ ] By continuously trading it on the stock market. - [ ] By putting it in a savings account. - [ ] By immediately refinancing it. > **Explanation:** You measure the liquidity of a real estate asset by evaluating how quickly it can be converted to cash without incurring a significant loss in value, considering factors like the average market time and transaction costs. ### Which organization likely provides guidelines and information relevant to real estate transactions? - [ ] NASA - [ ] FDA - [ ] CDC - [x] National Association of Realtors (NAR) > **Explanation:** The National Association of Realtors (NAR) provides guidelines, resources, and information relevant to real estate transactions and the housing market. ### What is a Real Estate Investment Trust (REIT)? - [ ] A personal investment account - [ ] A type of savings account - [x] A company that owns, operates, or finances income-producing real estate - [ ] A government bond > **Explanation:** A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-producing real estate, allowing individual investors to earn a share of the income produced through commercial real estate ownership.