Reading M6 Private Real Estate Investments |
Comprehensive Questions | Latest 2025/2026 Update
Question #1 of 19 Question ID: 1687692
Which condition is a prerequisite for using the direct capitalization approach to value real estate?
A) NOI must be stable or have a constant growth rate.
B) The subject property must not be unique.
C) The value of the land should be less than 10% of the total value of the project.
Question #2 of 19 Question ID: 1687684
Chao Chen is a client of Paul Christy, CFA. Christy advises Chen to diversify part of his portfolio into real
estate. Chen is highly risk-averse and feels good about the diversification benefit and inflation hedge in his
portfolio.
Which of the following is the most appropriate recommendation for Chen's portfolio?
Purchase an existing strip mall and convert it into a single big-box retail facility, and A) nd a
suitable national chain to lease it.
Purchase an existing apartment building with 95% occupancy rates, and replace the
B)
HVAC units to increase the rental rates.
Purchase a vacant lot and develop three residential single-family homes on that C) land.
, Question #3 of 19 Question ID: 1687695
Which of the following statements about farmland is most accurate?
A) Farmland is eligible for carbon o set credits.
Government subsidies in the form of minimum support price or mandated biofuel B) use
provides additional value for farmland.
C) Farmland does not present any valuable real options.
Question #4 of 19 Question ID: 1687688
Which investment would have the shortest investment time horizon?
A) Value-add investment.
B) Core-plus investment.
C) Opportunistic investment.
Question #5 of 19 Question ID: 1687689
Which of the following is most likely the reason for the development of secondary markets for limited
partner (LP) shares in a real estate limited partnership (RELP)?
A) General partners (GPs) only o er interval funds.
B) There are lockup provisions in RELPs.
C) There is a shortage of opportunities in the primary markets for a RELP.
Question #6 of 19 Question ID: 1687690
ABC Developers has acquired a piece of land for $2.5 million. Construction of a residential tower starts
right away and is expected to last two years. Construction costs are $30 million, with $15 million to be
paid at the end of each of the two years. Currently, there is a 40% probability that the market for
residential rental will be strong, generating annual NOI of 3.2 million for the first year after project
completion (i.e., third year from now). If the market for residential rental is not strong, a project can be
Comprehensive Questions | Latest 2025/2026 Update
Question #1 of 19 Question ID: 1687692
Which condition is a prerequisite for using the direct capitalization approach to value real estate?
A) NOI must be stable or have a constant growth rate.
B) The subject property must not be unique.
C) The value of the land should be less than 10% of the total value of the project.
Question #2 of 19 Question ID: 1687684
Chao Chen is a client of Paul Christy, CFA. Christy advises Chen to diversify part of his portfolio into real
estate. Chen is highly risk-averse and feels good about the diversification benefit and inflation hedge in his
portfolio.
Which of the following is the most appropriate recommendation for Chen's portfolio?
Purchase an existing strip mall and convert it into a single big-box retail facility, and A) nd a
suitable national chain to lease it.
Purchase an existing apartment building with 95% occupancy rates, and replace the
B)
HVAC units to increase the rental rates.
Purchase a vacant lot and develop three residential single-family homes on that C) land.
, Question #3 of 19 Question ID: 1687695
Which of the following statements about farmland is most accurate?
A) Farmland is eligible for carbon o set credits.
Government subsidies in the form of minimum support price or mandated biofuel B) use
provides additional value for farmland.
C) Farmland does not present any valuable real options.
Question #4 of 19 Question ID: 1687688
Which investment would have the shortest investment time horizon?
A) Value-add investment.
B) Core-plus investment.
C) Opportunistic investment.
Question #5 of 19 Question ID: 1687689
Which of the following is most likely the reason for the development of secondary markets for limited
partner (LP) shares in a real estate limited partnership (RELP)?
A) General partners (GPs) only o er interval funds.
B) There are lockup provisions in RELPs.
C) There is a shortage of opportunities in the primary markets for a RELP.
Question #6 of 19 Question ID: 1687690
ABC Developers has acquired a piece of land for $2.5 million. Construction of a residential tower starts
right away and is expected to last two years. Construction costs are $30 million, with $15 million to be
paid at the end of each of the two years. Currently, there is a 40% probability that the market for
residential rental will be strong, generating annual NOI of 3.2 million for the first year after project
completion (i.e., third year from now). If the market for residential rental is not strong, a project can be
