Which statement about a REIT is TRUE?

A Real Estate Investment Trust (REIT) may be traded on an exchange, which is a significant characteristic that makes it an appealing investment option. This means that shares of publicly traded REITs can be bought and sold in the same way as stocks on major stock exchanges, providing liquidity and accessibility for investors.

A vital aspect of REITs is that they are designed to offer individual investors a way to earn a share of the income produced through commercial real estate ownership without having to buy, manage, or finance any properties themselves. The fact that they can be traded on an exchange allows investors to easily enter and exit their positions, contributing to their popularity among both retail and institutional investors.

In contrast, other characteristics of REITs include certain tax advantages that require them to distribute a large percentage of their taxable income, which influences how they handle losses and tax reporting differently from regulated investment companies. Therefore, the ability to be traded on an exchange accurately reflects one of the primary operational frameworks for REITs.