Ch. 9 Questions- Jason Davies

1. (T/F). Land is usually considered to have the highest risk of real estate investments.

2. (T/F). The spread can be calculated by taking the difference between the return on the underlying assets and the cost of the borrowed funds.

3. (T/F). If your Net Present Value is equal to zero, you would make the decision not to invest.

4. (T/F). Adjusted Basis is calculated by taking the original basis in a property, add in depreciation and subtract any capital improvements.

5. (T/F). A Reserve Account is created for the periodic replacement of an improvement's short-term components.

6. Which of the following items is not a benefit of investing in real estate?
a. Inflation
b. Cash Flow
c. Appreciation
d. Diversification

7. Which would of the following properties best fits a low risk type of investment?
a. New Development
b. Raw Land
c. Distressed Apartment
d. Stabilized Warehouse

8. Which of the risks would a real estate lender most likely be concerned with?
a. Inflation Risk
b. Financial Risk
c. Liquidity Risk
d. Business or Market Risk

1. T 2. T. 3. F 4. F 5. T 6. A 7. D 8. B