Chapter 9. M/C and T/F

1.   The risk that the investor will not be able to pay promised debt service and that the property, used
      as collateral for the loan, will be taken from the investor.
      A. Management risk   B. Inflation risk   C. Liquidity risk   D. Financial risk
2.  The risk that the investor cannot sell and convert the real estate investment to cash, called
     liquefying, when desired.
      A. Management risk  B. Inflation risk    C. Liquidity risk   D. Financial risk
3.  The use of borrowed funds by the anticipation of increasing investment returns.
     A. Leverage   B. Spread   C. Mortgage reduction  D.  Adjusted basis
4.  Oligopoly is a market with a few suppliers that have some control over market prices since there is
     limited competition.
     A. T
     B. F
5.  The operating expense rate (OER) is that OER = Total Operating Expenses / EGI
     A. T
     B. F.
6.  Breakeven ratio (BER) shows how close an investor is to just breaking even on an investment.
      BER=(Total Operating Expense + ADS)/EGI
     A. T
     B. F
7.  The debt service coverage ratio (DSCR) is another measure of the money left after consideration
     of the annual debt payment.
     A. T
     B. F
8.  The broker's rate of return (BRR) is as follows:
      BRR=(Cash Flow +Mortgage Reduction)/Ve
     A. T.
     B. F.


Answers D, C, A, A, A, A, A, A.