©THEBRIGHTSTARS 2024
FSU REE4204 Exam 3 Sirmans Exam
Questions With Revised Answers
The use of debit in income-producing real estate can alter the value of:
a. amount risk of the cash flow to bankers
b. amount of cash flows to equity investors
c. risk of cash flows to equity investors
d. b and c
e. a and b - answer✔✔D
The following is a NOT a proper list of potential commercial properties:
a. hotels, motels, urban office buildings
b. suburban office buildings, shopping malls, strip centers
c. warehouses, mini-warehouses, theme parks
d. restaurants, fast-food facilities, nursing centers
e. hospitals, apartment complexes, casinos, public schools - answer✔✔E
A key non-real estate source of property cash flow is:
a. tax shelter
b. managerial talent
c. use of equity financing
d. debt financing
e. all the above - answer✔✔B
, ©THEBRIGHTSTARS 2024
Financial leverage is:
a. the left side of the balance sheet
b. the use of debt to finance real estate
c. the use of equity to finance real estate
d. a and b
e. b and c - answer✔✔B
Investors purchase multiple properties to:
a. diversify a portfolio
b. maximize investment return
c. minimize risk
d. a and b
e. all of the above - answer✔✔E
Positive leverage is defined as the use of debt at a cost ________________ than the return on the
asset which __________________ the return on equity.
a. decreases, increases
b. less, increases
c. increases, decreases
d more, decreases
e equal, increases - answer✔✔B
Using the formula ROE = [NOI - rD] /Equity, the term positive leverage implies that the return
On equity is ________________ than the return on assets if the cost of debt "r" is ___________
than ROA where ROA = NOI/EQUITY.
a. greater, less
b. less, greater
FSU REE4204 Exam 3 Sirmans Exam
Questions With Revised Answers
The use of debit in income-producing real estate can alter the value of:
a. amount risk of the cash flow to bankers
b. amount of cash flows to equity investors
c. risk of cash flows to equity investors
d. b and c
e. a and b - answer✔✔D
The following is a NOT a proper list of potential commercial properties:
a. hotels, motels, urban office buildings
b. suburban office buildings, shopping malls, strip centers
c. warehouses, mini-warehouses, theme parks
d. restaurants, fast-food facilities, nursing centers
e. hospitals, apartment complexes, casinos, public schools - answer✔✔E
A key non-real estate source of property cash flow is:
a. tax shelter
b. managerial talent
c. use of equity financing
d. debt financing
e. all the above - answer✔✔B
, ©THEBRIGHTSTARS 2024
Financial leverage is:
a. the left side of the balance sheet
b. the use of debt to finance real estate
c. the use of equity to finance real estate
d. a and b
e. b and c - answer✔✔B
Investors purchase multiple properties to:
a. diversify a portfolio
b. maximize investment return
c. minimize risk
d. a and b
e. all of the above - answer✔✔E
Positive leverage is defined as the use of debt at a cost ________________ than the return on the
asset which __________________ the return on equity.
a. decreases, increases
b. less, increases
c. increases, decreases
d more, decreases
e equal, increases - answer✔✔B
Using the formula ROE = [NOI - rD] /Equity, the term positive leverage implies that the return
On equity is ________________ than the return on assets if the cost of debt "r" is ___________
than ROA where ROA = NOI/EQUITY.
a. greater, less
b. less, greater
