Question

Advantages of an investment in real estate include all of the following EXCEPT:

A) The use of leverage to increase rates of return
B) Tax deductions
C) The possibility of a tax-deferred exchange
D) High liquidity

Answer 1

Real estate investments offer the possibility of using leverage, receiving tax deductions, and engaging in tax-deferred exchanges but are not characterized by high liquidity.

Step-by-step explanation:

The advantages of an investment in real estate include leveraging to increase rates of return, and accessibility to various tax deductions and opportunities for tax-deferred exchanges. However, high liquidity is not typically an advantage of real estate investments as converting these assets to cash usually requires considerable time and effort compared to more liquid investments like stocks or bonds.