1 A landlord can shift risk to tenants through the use of:
(A) tax stops
(B) escalator clauses
(C) net leases
(D) all of the above
2 In real estate investment analysis, capitalization rates:
(A) are a measure of the relationship between a property's market value and net operating income
(B) are used primarily as an income forecasting tool
(C) are a measure of the relationship between a property's market value and gross rental income
(D) none of the above are true
4. A real estate investment is available at an initial cash outlay of $10,000 and is expected to yield cash flows of $3,343.81 per year for five years. The internal rate of return is approximately:
5.The revenue a property is expected to generate after adjusting for operating expenses but before providing for debt service or income tax consequences is:
(A) net operating income
(B) effective gross income
(C) normalized gross income
(D) before-tax cash flow
1. D. A tax stop can require the tenant to reimburse the landlord if the property taxes exceed a certain threshold, an escalator clause can require a tenant to pay more rent once the landlord's costs exceed a certain threshold, and a net lease requires the tenant to pay certain costs usually borne by the landlord.
2. A. This is the definition.
3. A. ...
This solution discusses several important real estate finance concepts.
MBA-Finance homework questions
Please these are homework questions and they do not need to be very long but concrete and complete answers to the questions.
Answer these questions in light of Real Estate Finance.
1. What items should be considered when forecasting income and expenses for real estate over the investor's anticipated holding period?
2. Discuss the difference between an income and expense statement as prepared by an accountant, and an operating statement used by a real estate investment analyst.
3. When it comes to real estate finance, How does favorable financial leverage differ from unfavorable financial leverage?
4. Should a real estate investor try to be "debt-free?" Why or why not?
Answer the following two in light of International Finance
1. Discuss various types of derivatives contracts: Options, Futures and Forward Contracts.
2. Discuss various types of government and central bank intervention to impact currency exchange rates.