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CCIM 101 - Financial Analysis 2025/2026
– Updated Exam Questions with Verified
Correct Answers | Complete
Question 1
What is the primary difference between capitalization rate (cap rate) and yield in real estate
investment analysis?
A. Cap rate includes sale proceeds, yield does not
B. Cap rate does not factor in eventual sale proceeds, yield does
C. Cap rate is used for residential properties, yield is for commercial
D. Cap rate measures cash flow, yield measures debt
B. Cap rate does not factor in eventual sale proceeds, yield does
Rationale: Cap rate is calculated as Net Operating Income (NOI) divided by property value,
reflecting current income without considering future sale proceeds. Yield, such as Internal Rate
of Return (IRR), includes cash flows from operations and eventual sale, making it higher if there
is a profit on sale.
Question 2
What is the formula for yield in real estate investment?
A. Cap rate - growth
B. Cap rate + growth
C. NOI ÷ Property value
D. Cash flow ÷ Investment cost
B. Cap rate + growth
Rationale: Yield accounts for both the cap rate (NOI ÷ property value) and expected growth
in property value or income over time, reflecting total return on investment.
Question 3
Are leasing commissions included in Operating Expenses for a commercial property?
A. True, they are part of property management costs
B. False, they are included in Cash Flow Before Taxes
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C. True, they are deducted from Potential Rental Income
D. False, they are capitalized as acquisition costs
B. False, they are included in Cash Flow Before Taxes
Rationale: Leasing commissions are not operating expenses, as they are not recurring costs
of property operation. They are treated as capital expenditures and included in Cash Flow Before
Taxes.
Question 4
What is the definition of Net Present Value (NPV) in real estate investment?
A. The sum of all future cash flows
B. The difference between present value of cash inflows and outflows
C. The annual return on investment
D. The total cost of property acquisition
B. The difference between present value of cash inflows and outflows
Rationale: NPV calculates the present value of all future cash inflows (e.g., rental income,
sale proceeds) minus the present value of cash outflows (e.g., acquisition costs, operating
expenses), discounted at a specific rate.
Question 5
For commercial and investment properties, are loan costs paid at time period zero deducted in
full in the year they are paid?
A. True, they are expensed immediately
B. False, they are amortized over the loan term
C. True, they are added to NOI
D. False, they are included in operating expenses
B. False, they are amortized over the loan term
Rationale: Loan costs, such as origination fees, are capitalized and amortized over the term
of the loan. Any unamortized costs are expensed in the year the loan is paid off, not deducted
fully in year zero.
Question 6
What percentage of taxable income must a Real Estate Investment Trust (REIT) distribute to
stockholders annually?
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A. 75%
B. 80%
C. 90%
D. 95%
C. 90%
Rationale: To maintain tax-exempt status at the corporate level, a REIT must distribute at
least 90% of its taxable income as dividends to shareholders annually.
Question 7
Is a REIT subject to corporate-level tax on the taxable income it distributes to stockholders?
A. True, it pays federal taxes on all income
B. False, it passes the tax burden to shareholders
C. True, it pays taxes on undistributed income only
D. False, it is exempt from all taxes
B. False, it passes the tax burden to shareholders
Rationale: A REIT avoids corporate-level taxation on distributed income by passing at least
90% of taxable income to shareholders as dividends, who then pay taxes on those dividends.
Question 8
What is Section 1231 property in real estate?
A. Property held for less than one year
B. Real or depreciable business property held for more than one year
C. Personal property used for residential purposes
D. Property exempt from capital gains tax
B. Real or depreciable business property held for more than one year
Rationale: Section 1231 property includes real or depreciable business property, like
commercial buildings, held for over one year, qualifying for lower capital gains tax rates on sale.
Question 9
What is included in the basis for a purchased property?
A. Purchase price only
B. Purchase price plus capitalized acquisition costs
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CCIM 101 - Financial Analysis 2025/2026
– Updated Exam Questions with Verified
Correct Answers | Complete
Question 1
What is the primary difference between capitalization rate (cap rate) and yield in real estate
investment analysis?
A. Cap rate includes sale proceeds, yield does not
B. Cap rate does not factor in eventual sale proceeds, yield does
C. Cap rate is used for residential properties, yield is for commercial
D. Cap rate measures cash flow, yield measures debt
B. Cap rate does not factor in eventual sale proceeds, yield does
Rationale: Cap rate is calculated as Net Operating Income (NOI) divided by property value,
reflecting current income without considering future sale proceeds. Yield, such as Internal Rate
of Return (IRR), includes cash flows from operations and eventual sale, making it higher if there
is a profit on sale.
Question 2
What is the formula for yield in real estate investment?
A. Cap rate - growth
B. Cap rate + growth
C. NOI ÷ Property value
D. Cash flow ÷ Investment cost
B. Cap rate + growth
Rationale: Yield accounts for both the cap rate (NOI ÷ property value) and expected growth
in property value or income over time, reflecting total return on investment.
Question 3
Are leasing commissions included in Operating Expenses for a commercial property?
A. True, they are part of property management costs
B. False, they are included in Cash Flow Before Taxes
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, 2
C. True, they are deducted from Potential Rental Income
D. False, they are capitalized as acquisition costs
B. False, they are included in Cash Flow Before Taxes
Rationale: Leasing commissions are not operating expenses, as they are not recurring costs
of property operation. They are treated as capital expenditures and included in Cash Flow Before
Taxes.
Question 4
What is the definition of Net Present Value (NPV) in real estate investment?
A. The sum of all future cash flows
B. The difference between present value of cash inflows and outflows
C. The annual return on investment
D. The total cost of property acquisition
B. The difference between present value of cash inflows and outflows
Rationale: NPV calculates the present value of all future cash inflows (e.g., rental income,
sale proceeds) minus the present value of cash outflows (e.g., acquisition costs, operating
expenses), discounted at a specific rate.
Question 5
For commercial and investment properties, are loan costs paid at time period zero deducted in
full in the year they are paid?
A. True, they are expensed immediately
B. False, they are amortized over the loan term
C. True, they are added to NOI
D. False, they are included in operating expenses
B. False, they are amortized over the loan term
Rationale: Loan costs, such as origination fees, are capitalized and amortized over the term
of the loan. Any unamortized costs are expensed in the year the loan is paid off, not deducted
fully in year zero.
Question 6
What percentage of taxable income must a Real Estate Investment Trust (REIT) distribute to
stockholders annually?
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A. 75%
B. 80%
C. 90%
D. 95%
C. 90%
Rationale: To maintain tax-exempt status at the corporate level, a REIT must distribute at
least 90% of its taxable income as dividends to shareholders annually.
Question 7
Is a REIT subject to corporate-level tax on the taxable income it distributes to stockholders?
A. True, it pays federal taxes on all income
B. False, it passes the tax burden to shareholders
C. True, it pays taxes on undistributed income only
D. False, it is exempt from all taxes
B. False, it passes the tax burden to shareholders
Rationale: A REIT avoids corporate-level taxation on distributed income by passing at least
90% of taxable income to shareholders as dividends, who then pay taxes on those dividends.
Question 8
What is Section 1231 property in real estate?
A. Property held for less than one year
B. Real or depreciable business property held for more than one year
C. Personal property used for residential purposes
D. Property exempt from capital gains tax
B. Real or depreciable business property held for more than one year
Rationale: Section 1231 property includes real or depreciable business property, like
commercial buildings, held for over one year, qualifying for lower capital gains tax rates on sale.
Question 9
What is included in the basis for a purchased property?
A. Purchase price only
B. Purchase price plus capitalized acquisition costs
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