Question

Equity REIT share price and overall stock price are ______ correlated, and Equity REIT dividends are taxed at ______ rates.

a) Positively, higher
b) Negatively, lower
c) Positively, lower
d) Negatively, higher

Answer 1

Equity REIT share price and overall stock price are negatively correlated, and Equity REIT dividends are taxed at higher rates.

Step-by-step explanation:

Equity REIT share price and overall stock price are negatively correlated, and Equity REIT dividends are taxed at higher rates.

In simple terms, when the share price of an Equity REIT increases, the overall stock price tends to decrease, and vice versa. This negative correlation occurs because investors often view REITs as a stable and income-generating investment, so when they seek higher returns elsewhere, they may sell off their REIT shares, causing the share price to drop.

Additionally, Equity REIT dividends are taxed at higher rates compared to stock dividends. This is because the dividends from REITs are considered ordinary income rather than qualified dividends, which are taxed at lower rates.