REE CHAPTER 8 TEST QUESTIONS
WITH REVISED ANSWERS
When estimating the net operating income of a property, which of the following
expenditures would be included?
Multiple select question.
Property taxes
mortgage payments
Hazard and fire insurance premiums
federal income tax payments - Answer-Property taxes
Hazard and fire insurance premiums
The rental income an existing, stabilized property is expected to generate, after
allowances for vacancies and collection losses, is called
Multiple choice question.
effective gross income
gross potential income
net operating income
gross operating income - Answer-effective gross income
Market rent can be defined as the property's
Multiple choice question.
net rent after expenses
contract rent
average rent
potential gross rent - Answer-potential gross rent
As the cap rate increases, the price (value) to NOI ratio
Multiple choice question.
decreases
is unaffected
increases - Answer-increases
Two apartment markets are considered to be equally risky. If market participants expect
more price appreciation in market A than in market B,
Multiple choice question.
required returns will be lower in market A
cap rates will be the same in both markets
cap rates will be higher in market A
cap rates will be lower in market A - Answer-cap rates will be lower in market A
Which of the following is the most true?
Multiple choice question.
Cap rates and expected growth rates drive discount rates
Cap rates determine value
Discount and expected growth rates rates drive cap rates - Answer-Discount and
expected growth rates rates drive cap rates
WITH REVISED ANSWERS
When estimating the net operating income of a property, which of the following
expenditures would be included?
Multiple select question.
Property taxes
mortgage payments
Hazard and fire insurance premiums
federal income tax payments - Answer-Property taxes
Hazard and fire insurance premiums
The rental income an existing, stabilized property is expected to generate, after
allowances for vacancies and collection losses, is called
Multiple choice question.
effective gross income
gross potential income
net operating income
gross operating income - Answer-effective gross income
Market rent can be defined as the property's
Multiple choice question.
net rent after expenses
contract rent
average rent
potential gross rent - Answer-potential gross rent
As the cap rate increases, the price (value) to NOI ratio
Multiple choice question.
decreases
is unaffected
increases - Answer-increases
Two apartment markets are considered to be equally risky. If market participants expect
more price appreciation in market A than in market B,
Multiple choice question.
required returns will be lower in market A
cap rates will be the same in both markets
cap rates will be higher in market A
cap rates will be lower in market A - Answer-cap rates will be lower in market A
Which of the following is the most true?
Multiple choice question.
Cap rates and expected growth rates drive discount rates
Cap rates determine value
Discount and expected growth rates rates drive cap rates - Answer-Discount and
expected growth rates rates drive cap rates
