Exam (elaborations)
REE5305 CH 13 (1).
Exam of 1 pages for the course REE 5305 at REE 5305 (REE5305 CH 13 (1).)
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REE5305 CH 13Real estate that is not leveraged is not affected by interest rate risk - ANS-False
When an investor performs and investigation while considering acquisition of a property,
this is referred to as: - ANS-Due diligence
Which of the following is NOT a component of lease rollover risk - ANS-liquidity risk
Consider two investments: Investment 1 has a 50% chance of of producing a return of
zero and a 50 percent chance of producing a return of 40 percent. Investment 2 has a
50 percent chance of producing a return of 10 percent and a 50 percent chance or
producing a return of 30 percent. Which of the following statements regarding the
investment is true? - ANS-Investment 1 is risker than investment 2
Which of the following BEST describes the process of "partitioning the IRR"? -
ANS-Using the IRR as a discount rate and determining how much of the present value
comes from income and resale
If the renewal probability for a lease is assumed to be 60 percent and the number of
months vacant would be 12 months if the lease is not renewed, what is the expected
vacancy at the end of the lease? - ANS-4.8 months
Which of the following best describes the approach to valuing land as a "Real option"? -
ANS-The land value reflects the fact that the developer can wait to decide whether to
construct on a building on the site
Which of the following would be most suitable for use in analyzing the best-case,
worst-case, and most-likely case outcomes for a particular investment opportunity? -
ANS-sensitivity analysis
A property owner may incur some downtime due to the expiration of a lease that has not
been renewed. The time period that occurs before the owner can contract with a new
tenant is referred to as: - ANS-Vacancy turnover
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