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Summary Question39. What is an underlying component that contributes to an investor's decision

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What is an underlying componentQuestion39. What is an underlying component that contributes to an investor's decision as to what capitalization rate is appropriate for a particular property...? The amount of real estate taxes paid on the property The amount of expenses a property will demand The amount of gross potential income a property can earn The amount of risk associated with the dealAnswer & ExplanationThe correct answer is: The amount of risk associated with the dealExplanation:1.Capitalization Rate (Cap Rate):oThe cap rate is a measure used in real estate to evaluate the potential return on an investment property. It is calculated by dividing the net operating income (NOI) of a property by its current market value or purchase price.2.Risk and Cap Rate:oOne of the primary factors influencing an investor's decision on what cap rate to apply to a property is the level of risk associated with that investment.o

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39. What is an underlying component that contributes to an investor's decision

as to what capitalization rate is appropriate for a particular property...? The

amount of real estate taxes paid on the property The amount of expenses a

property will demand The amount of gross potential income a property can earn

The amount of risk associated with the deal




Answer & Explanation


The correct answer is: The amount of risk associated with the deal


Explanation:


1. Capitalization Rate (Cap Rate):


o The cap rate is a measure used in real estate to evaluate the

potential return on an investment property. It is calculated by

dividing the net operating income (NOI) of a property by its

current market value or purchase price.

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