by: Mario Jauregui
True or False
Once you have commit
funds to an investment, your opportunity cost is the highest relative return of
other investment alternatives.
T
True or False
The liquidity of
real estate as an investment is not an issue at all for potential investors.
F: Real estate is not easily liquefied when desired
Multiple Choice
Which of the
following are potential risks that a real estate investor might face when
looking into investing their money into a new development?
(A)
Business or Market Risk
(B)
Opportunity Cost
(C)
Management Risk
(D)
Inflation Risk
(E)
All of the above
E
Multiple Choice
A
___________________ is used to account for the periodic replacement of the
improvement’s short-lived components, for example, the roof, HVAC system,
appliances, paint, and carpeting.
(A)
Tax Shelter
(B)
Cash Flow
(C)
Reserve Account
(D)
Replacement Cash Flow
(E)
Non of the above
C: Replacements for reserve or replacement reserves
True or False
A tax shelter is a
reduction, usually mortgage interest and tax depreciation for real estate
investments, in taxable investment income.
T
True or False
Economic
depreciation is the annual allowance, set by Congress and collected and
enforced by the IRS, used to recover or recapture capital investment in
long-term assets.
F: Tax, is the term used for the annual allowance set by
Congress and collected by the IRS.
Multiple Choice
When you participate
in different forms of financial investments you are using ________________.
(A)
Inflation
(B)
Diversification
(C)
Spread
(D)
Leverage
B
True or False
If Ro (return
generated by the asset) is greater then Rm (the cost of borrowing), then Re
(rate of return to the equity investor) is greater than Ro (return generated by
the asset.
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