BUSI 422 Final Exam - Liberty University 2025 With
100% Accurate Answers
Funds from Operations (FFO) - Correct Answer ✅️☑️
- a measure of of the cash flow available to
the REIT for distributions (dividends) to shareholders.
-not the best measure of cash flow
FFO =
(Net Income + Depreciation and Amortization) / Shares Issued
Standby Commitment - Correct Answer ✅️☑️
- Commitment by a lender to a borrower for a
given amount of money at specified terms for the financing of the project.
- The borrower pays a fee for the privilege of either executing the loan or allowing the
commitment to lapse.
- similar to a permanent take-out loan however, the borrower nor the lender expects to use
the commitment
- a standby lender agrees to pay land loan costs if the owner is unable to sell
-Repays ADL loan
Permanent Take-out Loan - Correct Answer ✅️☑️- Permanent mortgage loan which replaces
the construction loan when, commonly, the builder has successfully sold, at minimum, a
majority of the units under construction
-Repay ADL loan
Lessor/Lessee - Correct Answer ✅️☑️Lessor: holds the title
Lessee: granted possession of the property for a period of time
Mortgagor/Mortgagee - Correct Answer ✅️☑️Mortgagor: borrower of a mortgage loan
, Mortgagee: lender of a mortgage loan
Grantor/Grantee - Correct Answer ✅️☑️Grantor: transfers ownership rights of a property to
another person
Grantee: recipient of the property
Sales Comparison Approach - Correct Answer ✅️☑️- based on data provided from recent sales
of comparable properties
- comparables are adjusted to account for differences between properties
- must be "arm's-length" transaction
Cost Approach - Correct Answer ✅️☑️- the idea that a buyer would not pay more for a property
than the cost to buy the land and build the structure.
- the estimate is reduced by estimating physical deterioration, functional obsolescence, or
external obsolescence.
Income Approach - Correct Answer ✅️☑️- based on the principle that the value of a property is
related to its ability to produce cash flow
- uses gross income multiplier and direct capitalization
- used for income-producing properties
Relationship between interest rates and prices - Correct Answer ✅️☑️They move in opposite
directions
Coefficient of Correlation - Correct Answer ✅️☑️- A statistical measure of the strength of the
relationship between the relative movements of two variables.
- limited from -1 to 1
- negative one refers to a completely inverse relationship while a correlation of positive one
refers to a perfect correlation.
100% Accurate Answers
Funds from Operations (FFO) - Correct Answer ✅️☑️
- a measure of of the cash flow available to
the REIT for distributions (dividends) to shareholders.
-not the best measure of cash flow
FFO =
(Net Income + Depreciation and Amortization) / Shares Issued
Standby Commitment - Correct Answer ✅️☑️
- Commitment by a lender to a borrower for a
given amount of money at specified terms for the financing of the project.
- The borrower pays a fee for the privilege of either executing the loan or allowing the
commitment to lapse.
- similar to a permanent take-out loan however, the borrower nor the lender expects to use
the commitment
- a standby lender agrees to pay land loan costs if the owner is unable to sell
-Repays ADL loan
Permanent Take-out Loan - Correct Answer ✅️☑️- Permanent mortgage loan which replaces
the construction loan when, commonly, the builder has successfully sold, at minimum, a
majority of the units under construction
-Repay ADL loan
Lessor/Lessee - Correct Answer ✅️☑️Lessor: holds the title
Lessee: granted possession of the property for a period of time
Mortgagor/Mortgagee - Correct Answer ✅️☑️Mortgagor: borrower of a mortgage loan
, Mortgagee: lender of a mortgage loan
Grantor/Grantee - Correct Answer ✅️☑️Grantor: transfers ownership rights of a property to
another person
Grantee: recipient of the property
Sales Comparison Approach - Correct Answer ✅️☑️- based on data provided from recent sales
of comparable properties
- comparables are adjusted to account for differences between properties
- must be "arm's-length" transaction
Cost Approach - Correct Answer ✅️☑️- the idea that a buyer would not pay more for a property
than the cost to buy the land and build the structure.
- the estimate is reduced by estimating physical deterioration, functional obsolescence, or
external obsolescence.
Income Approach - Correct Answer ✅️☑️- based on the principle that the value of a property is
related to its ability to produce cash flow
- uses gross income multiplier and direct capitalization
- used for income-producing properties
Relationship between interest rates and prices - Correct Answer ✅️☑️They move in opposite
directions
Coefficient of Correlation - Correct Answer ✅️☑️- A statistical measure of the strength of the
relationship between the relative movements of two variables.
- limited from -1 to 1
- negative one refers to a completely inverse relationship while a correlation of positive one
refers to a perfect correlation.
