CCIM 101 - Module 3 Exam Questions
and Answers
Cash Flow Model Components - Correct Answers -Initial Investment
Cash flows from operations during the holding period
Cash Flow from disposition (sale proceeds)
Holding period
4 Basic Questions CF model addresses: - Correct Answers -How many dollars go into
the investment?
When do the dollars go into the investment?
How many dollars come out of the investments/
When do the dollars come out of the investment?
Negative NPV indicates that - Correct Answers -the investment will not achieve the
desired yield.
Zero NPV indicates that - Correct Answers -the investment will achieve exactly the
desired yield.
IRR limitations fall into four main areas: - Correct Answers -discounting negative cash
flows;
reinvestment of periodic cash flows;
size disparity (difference in initial investment amounts);
time disparity (difference in projected holding periods)
Step 1 in the capital accumulation process/calculation - Correct Answers -Adjust each
investment alternative to eliminate all negative cash flows and reinvest all positive cash
flows to the end of the holding period using an appropriate discount rate.
Investors are guided by two basic preferences: - Correct Answers -More is better than
less
Sooner is better than later
The components of an investment that reflect bot the amounts and timing of the cash
flows: - Correct Answers -Amount of periodic cash flows
Size of the sale proceeds
Initial investment amount
Timing of cash flows
All else equal, investors prefer: - Correct Answers -Larger periodic cash flows
and Answers
Cash Flow Model Components - Correct Answers -Initial Investment
Cash flows from operations during the holding period
Cash Flow from disposition (sale proceeds)
Holding period
4 Basic Questions CF model addresses: - Correct Answers -How many dollars go into
the investment?
When do the dollars go into the investment?
How many dollars come out of the investments/
When do the dollars come out of the investment?
Negative NPV indicates that - Correct Answers -the investment will not achieve the
desired yield.
Zero NPV indicates that - Correct Answers -the investment will achieve exactly the
desired yield.
IRR limitations fall into four main areas: - Correct Answers -discounting negative cash
flows;
reinvestment of periodic cash flows;
size disparity (difference in initial investment amounts);
time disparity (difference in projected holding periods)
Step 1 in the capital accumulation process/calculation - Correct Answers -Adjust each
investment alternative to eliminate all negative cash flows and reinvest all positive cash
flows to the end of the holding period using an appropriate discount rate.
Investors are guided by two basic preferences: - Correct Answers -More is better than
less
Sooner is better than later
The components of an investment that reflect bot the amounts and timing of the cash
flows: - Correct Answers -Amount of periodic cash flows
Size of the sale proceeds
Initial investment amount
Timing of cash flows
All else equal, investors prefer: - Correct Answers -Larger periodic cash flows
