306 Final

If we desire to classify land by its use, land that does not include any improvements to the land would be categorized as:

"raw" land

an overall capitalization rate (R0) is divided into which type of income or cash flow to obtain an indicated market value?

Net operating income

Commercial real estate assets are markedly different from assets in other financial markets due to their heterogeneity, immobility, localized nature, illiquidity, and market segmentation. Based on your understanding of these characteristics, which of the following statements best describes what is meant by highly segmented markets?

Properties can be grouped based on classifications such as property type, location, investor type or price

estimated capital expenditures

are subtracted to compute NOI in a below-line treatment

In a partially-amortizing mortgage loan, the balance of the principal amount is paid at maturity in what is commonly referred to as a(n):

balloon payment

which of the following statements regarding capitalization rates on commercial real estate investments is the most correct?

cap rates vary positively with the perceived risk of the investment

The expected costs to make replacements, alterations, or improvements to a building that materially prolong its life and increase its value is referred to as:

capital expenditures

The market in which required rates of return on available investment opportunities are primarily determined is referred to as the

capital market

The required rate of return that an individual or company expects from a real estate investment is determined in the:

capital market for both debt and equity

Each commercial property has unique features, whether it is its age, the building design of its structures, occupancy or its location. As such, real estate markets consist of assets that are considered:

heterogeneous

The going-in cap rate, or overall capitalization rate, is a measure of the relationship between a property's current income stream and its price or value. Which of the following statements regarding cap rates is true?

it is analogous to the dividend yield on a common stock

Which of the following would be considered a tangible asset?

land

Real estate is property, which can be either a tangible or an intangible asset. Which of the following would be considered an intangible asset?

mortgage

which of the following expenses is not an operating expense

mortgage payment

Which of the following measures is considered the fundamental element needed to determine market value for an income-producing property?

net operating income

The actions of local, state, and federal governments affect real estate values

primarily through their taxation policies, primarily through user markets, primarily through the capital market

which of the following types of properties probably would not be appropriate for income capitalization?

public school

Which of these is most likely to be regarded as a capital expenditure rather than an operating expense?

roof replacement

The initial short-term introductory rate offered on adjustable rate mortgages (ARMs) is more commonly referred to as a(n):

teaser rate

Real estate consists of the physical structures and infrastructure that accompany the land. All of the following are examples of an improvement to the land EXCEPT:

the building and parking lot

A market where tenants negotiate rent and other terms with property owners or their managers is referred to as a(n)

user or space market