Real Estate Finance Problem Set
Not what you're looking for?
1. The difference between the rate of return on assets and the cost of borrowing is:
(A) financial leverage
(B) spread
(c) debt service
(D) none of the above
2 When the rate of return on assets exceeds the cost of borrowing, it represents:
(A) negative spread
(B) positive spread
(C) favorable spread
(D) unfavorable spread
3 If the real estate investment that is being financed is the investor's sole asset, the investor's debt-to-equity ratio will be:
(A) the same as the loan-to-value ratio
(B) greater than the loan-to-value ratio
(C) less than the loan-to-value ratio
(D) unrelated to the loan-to-value ratio
4. A property has a potential gross rent of $1,500,000; operating expenses of $765,750; a vacancy allowance of $45,000, and other income of $9,000. What is its effective gross income?
(A) $1,455,000
(B) $1,464,000
(C) $698,250
(D) none of the above
5. In contemporary risk analysis:
(A) risk is defined as the measurable likelihood of variance from the most probable outcome
(B) no attempt is made to quantify risk
(C) the terms risk and uncertainty are used synonymously
(D) investors are viewed as being risk-neutral
Purchase this Solution
Solution Summary
This solution discusses various real estate finance concepts.
Solution Preview
1. B. This is the definition of a spread in real estate finance.
2. A. The term "unfavorable spread" does not exist in real estate finance, only "unfavorable leverage" which is a different concept.
3. B. Please see the computations below which will explain this in better detail:
Loan to value ratio = ...
Purchase this Solution
Free BrainMass Quizzes
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.
Motivation
This tests some key elements of major motivation theories.
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.