Chapter 9 By Albert Chang

1.) The pursuit of a future return by delaying consumption and level of risk is investing? (T)

2.) Risk is the likelihood of an occurrence of an unwanted event? (T)

3.) Management risk is business or market conditions may change unexpectedly? (F)

4.) Financial risk is the risk that the investor will not be able to pay back? (T)

5.) Cash flow is the income from the real estate investment? (T)

6.) The risk that business or market conditions may change unfavorably.

a) Management risk

b) Inflation risk

c) Liquidity risk

d) Business risk

7.) The increase in asset value over a certain period.

a) Appreciation

b) Reserve Account

c) Leverage

d None of the Above

8.)  The original basis in the property improvements, plus any capital improvement, less depreciation taken. 

a) Taxation 

b) Depreciation

c) Adjusted basis 

d) None of the Above

Answer Keys: 1)T 2)T 3)F 4)T 5)T 6)D 7)A 8)C