Multiple Choice - True/False Questions for Chapter 9

Multiple Choice Questions:

1.

A market with a few suppliers that have some control over market prices since there is limited competition is called what?

a) Monopoly

b) Stock Market

c) Real estate market

d) Oligopoly

2.

The possibility that subpar managerial performance lowers the investor’s return is called what?

a) Management risk

b) Financial risk

c) Inflation risk

d) Market risk

3.

Which is a benefit when investing in real estate?

a) Diversification

b) Tax shelter

c) Cash Flows

d) all of the above

True/False Questions:

1.

Opportunity cost is one of the benefits when investing in real estate.

- True

- False

2.

The risk that the investor cannot sell and convert the real estate investment to cash is called liquidity risk.

- True

- False

3.

The difference between the return on the underlying assets and the cost of borrowed funds is called spread.

- True

- False

4.

A decrease in nominal prices is called inflation.

- True

- False

5.

Investing in different assets to lower the risk is called diversification.

- True

- False

Answers:

d) a) d)

False, True, True, False, True

Posted by Jonathan Kappler