CAIA 2 Real Estate Exam Questions And Answers 100% Verified

CAIA 2 Real Estate Exam Questions And Answers 100% Verified Advantages of Real Estate - answer1) Hedge against unanticipated inflation. 2) Returns not perfectly correlated with stock and bond. 3) Cash inflows. 4) Tax advantages 5) Potential for absolute returns Disadvantages of Real Estate - answer1) Heterogeneous in nature. All RE have different characteristics so need Due D. 2) Lumpy and indivisible. 3) Non exchange traded and high unit and transaction costs. i.e. illiquid. Top Down Asset Allocation - answerLook at big picture, from categories like property type, investment management and risk reward profile Bottom up - answerlook at individual properties Decision making driven by individual asset selection 4 Common Categories of RE Investment: Equity vs Debt - answerHowever, equity may act like debt and vice versa so need due d. e.g. office building with long term lease vs mortgage with high level of risk (behave like equity) 4 Common Categories of RE Investment: Residential vs Commercial - answerInsti mostly invest in mortgages for residential, directly and through LPs for commercial. Commercial RE valuation depends on CF while residential is on credit rating of occupants 4 Common Categories of RE Investment: Private vs Public - answerPrivate: investment in non exchange traded properties. Equity REIT: more than 50% in properties vs mortgage REIT vs Hybrid Other Categories of RE Investment: Primary vs Sec vs Tertiary Markets - answerPrimary means big cities, secondary is 2nd tier while tertiary is small communities Other Categories of RE Investment: Core vs Value Added vs Opportunistic RE - answerGroup by risk characteristics. 1) Core: high quality tenants with CF, 2) Non Core: Value added and Opportunistic RE (less certain CF and need some investment). 3) Opportunistic: most ris