Question

Amethyst wanted to invest in real estate, but did not have enough money to buy commercial property on her own. Instead, she invested in a(n) ___________which pooled her money with other investors' to purchase the property and manage the property for her and the other investors. (Select the best answer below.)

A. exchange-traded fund
B. bond index mutual fund
C. real estate investment trust
D. stock index mutual fund
E. direct real estate investment

Answer 1

Amethyst invested in a real estate investment trust (REIT) which pooled her money with other investors' to purchase and manage the property for her and the other investors.

Step-by-step explanation:

Amethyst wanted to invest in real estate, but did not have enough money to buy commercial property on her own. Instead, she invested in a real estate investment trust (REIT) which pooled her money with other investors' to purchase the property and manage the property for her and the other investors.

A real estate investment trust is a company that owns, operates, or finances income-producing real estate. By investing in a REIT, Amethyst becomes a shareholder and gains exposure to a diversified portfolio of properties, without having to buy and manage properties herself.

REITs are required to distribute a significant portion of their earnings as dividends to shareholders, so Amethyst would receive regular income from her investment. This makes a REIT attractive to investors who want to invest in real estate but lack the funds or expertise to do so individually.