WALL STREET PREP FINANCIAL
MODELING EXAM SCRIPT TESTED
QUESTIONS VERIFIED SOLUTIONS
⩥ which of the following is not a common closing cost. Answer: asset
management fees
⩥ what is a good rule of thumb for an acquisition fee as a percentage of
the purchase price. Answer: 1%
⩥ what is the largest adjustment made in calculating reversion value for
a commercial property. Answer: Forward Rent Abatements
⩥ what does unlevered cash flow (UCF) measure. Answer: net ash
inflows and outflows before taking into account cash flows related to
financing
⩥ why is t important to consider both unlevered and levered investment
returns. Answer: Because real estate is typically highly levered
⩥ tenant improvements are a function of what. Answer: supply and
demand
, ⩥ in which scenario does a landlord pay tenant improvement costs
directly to the tenant. Answer: Tenant improvement allowance
⩥ when are apital expenditures included in operating expenses. Answer:
Never
⩥ what are capital reserves. Answer: funds set aside from operating cash
flow for future capital improvements
⩥ Which of the following is typically the largest piece of the capital
stack. Answer: Senior Debt
⩥ which of the following is the most risky position in the capital stack.
Answer: common equity
⩥ which of the following typically has the right to foreclose on the
equity position and take control of the property. Answer: Mezzanine
Debt
⩥ which of the following is not a reason investors use leverage. Answer:
Reduce investment returns
MODELING EXAM SCRIPT TESTED
QUESTIONS VERIFIED SOLUTIONS
⩥ which of the following is not a common closing cost. Answer: asset
management fees
⩥ what is a good rule of thumb for an acquisition fee as a percentage of
the purchase price. Answer: 1%
⩥ what is the largest adjustment made in calculating reversion value for
a commercial property. Answer: Forward Rent Abatements
⩥ what does unlevered cash flow (UCF) measure. Answer: net ash
inflows and outflows before taking into account cash flows related to
financing
⩥ why is t important to consider both unlevered and levered investment
returns. Answer: Because real estate is typically highly levered
⩥ tenant improvements are a function of what. Answer: supply and
demand
, ⩥ in which scenario does a landlord pay tenant improvement costs
directly to the tenant. Answer: Tenant improvement allowance
⩥ when are apital expenditures included in operating expenses. Answer:
Never
⩥ what are capital reserves. Answer: funds set aside from operating cash
flow for future capital improvements
⩥ Which of the following is typically the largest piece of the capital
stack. Answer: Senior Debt
⩥ which of the following is the most risky position in the capital stack.
Answer: common equity
⩥ which of the following typically has the right to foreclose on the
equity position and take control of the property. Answer: Mezzanine
Debt
⩥ which of the following is not a reason investors use leverage. Answer:
Reduce investment returns
