REITs provide liquidity because they:

Real Estate Investment Trusts (REITs) provide liquidity primarily because they trade on stock exchanges like publicly traded companies. This characteristic allows investors to buy and sell shares of REITs throughout the trading day, providing them with immediate access to cash if they choose to sell their shares. The trading of REITs on major exchanges, such as the New York Stock Exchange, enhances their liquidity, making it easy for investors to enter or exit positions without heavy transaction costs or delays.

This aspect is significant in the context of alternative investments, where many asset classes are illiquid and harder to trade. The ability to quickly convert an investment in a REIT into cash provides a compelling advantage for investors seeking both exposure to real estate and the liquidity associated with stock ownership.

The other choices do not accurately reflect the primary reason for the liquidity of REITs. For instance, while redeeming for cash at any time might sound appealing, not all investment vehicles offer redemption options like mutual funds do. Additionally, while the payment of corporate taxes is a requirement for many corporations, it is not related to the liquidity or trading characteristics of REITs. Lastly, the assertion that REITs cannot distribute dividends is incorrect; in fact, one of the requirements for a