Security is a financial instrument backed by assets. They give the holder an interest or right in something else. A regulation u

Question

3 years ago

11

Security is a financial instrument backed by assets. They give the holder an interest or right in something else. A regulation u

nder state or federal securities laws may apply to which of the following?
a. a speculative purchase of raw land by a doctor as part of a retirement plan
b. a condominium project that includes both residential and retail uses within one structure
c. a resort condominium project in which owners enter their units in a common rental pool to enhance their income

Business

1 answer:

Ksivusya [100] · Answer 1 · 2022-06-15T13:08:56+03:00

Answer:

c. a resort condominium project in which owners enter their units in a common rental pool to enhance their income

Explanation:

As provided, the company here aggregates funds to acquire property and then earn rental income. The company can be a combination of many individuals or firms or any other form. But since it is earning an assured income in the form of rentals, it can be categorized as security.

Accordingly if it is a security, the security laws will be applicable on them.

Option a and b do not provide so, as they do not form a security, as in case a there is no definite income attached. In case b there are losses also attached, as it is for residential and retail in the same volume, making it loose its commercial substance.