Chapter 9 Questions

By Matthew Seely

All of the fallowing is Risks of Real Estate according to the book:

A.      Opportunity Cost

B.      Management

C.      Liquidity

D.      Cash Flow

All of the fallowing are Benefits of Real Estate;

A.      Appreciation

B.      Tax Shelter

C.      Mortgage Reduction

D.      Market

Opportunity Costs are the value of the next-best investment?

                A . True

                B.  False

Cash Flow is the loss of money from Real Estate?

A.      True

B.      False

A adjusted basis is the original basis in the property improvement plus any capital improvements, less __________.

A.      Rents

B.      Vacancy Loss

C.      Depreciation

D.      Mortgage

Diversification is investing in a variety of assets to spread risk and, hopefully avoid large losses.

A.      True

B.      False

 

Monopoly’s in Real Estate are illegal?

A.      True

B.      False

 

Liquidity Risk is?

A.      The risk of falling in water

B.      The risk of a flood destroying the house, and all of your possessions.  

C.      The risk that your home could be worth far less then what you bought it for.

D.      The risk of the time that it takes to sell the a Real Estate Investment?

 

 

Before tax Cash Flow: PGI Less V&C  = EGI , EGI Less OE = NOI, NOI less ADS = BFCT

A.      True

B.      False