RECA Commercial 300 questions
and correct answers verified and
graded A+
Which of the following are attributes of commercial real estate assets?
A- Land, transaction time frame, transaction costs, expensive f/high-value
B- Long-lasting, highly regulated, long production cycle
C- management intensive, heterogeneous, return measures
D- All answers are correct
All answers are correct
Which of the following rates should be used when performing a discounted cash flow analysis
when an investor wants to determine the market value of a commercial real estate asset?
A- Opportunity cost of capital rate
B- Effective annual interest rate
C- Market discount rate
D- Capitalization rate
C- Market discount rate
,Which of the following statements about adjusting the debt-to-equity ratio in the capital stack is
correct?
A- Adjusting the debt-to-equity ratio does not change the overall expected rate of return
B- Decreasing the amount of debt decreases the overall expected rate of return
C- Increasing the aount of equity increases the overall expected rate of return
D- All answers are correct
Adjusting the debt-to-equity ratio does not change the overall expected rate of return
What is the purpose of a leveraged discounted cash flow analysis?
A- To value the equity portion of a real estate asset's financial structure
B- To value the debt portion of a real estate asset's financial structure
C- To estimate the overall rate of risk in acquiring the real estate asset
D- To estimate the overall rate of return for acquiring the real estate asset
To value the equity portion of a real estate asset's financial structure
,How do I calculate the monthly mortgage payments for semi-annual compounding.
Set 2 P/Yr
Annual interest rate SHIFT-NOM%
SHIFT EFF%
12 SHIFT P/YR
SHIFT NOM%
Enter positive morgage amount
total # of months N
PMT (to get monthly payment amount)
So, first take NOM% (annual rate at 2P/Y), change it to EFF%, then change to 12 P/Y get new
NOM%....add positive PV, add N (months)
Commercial real estate assets have a number of attributes that make them unique relative to
other types of investments. These attributes include the following: (x10)
1. They involve land
2.Transaction time frames are long
3. Transaction costs are high
4. they are expensive
5. They are long lasting
6. Highly regulated
7. have a long production cycle
8. are management intensive
9. are heterogeneous
10. Involve measuring return on investment
, 1. Long-lasting, Durable Goods
2. Expensive, High-valued (left for well capitalized investors)
3. Transaction Costs: Due diligence and commissions alone comprise about three to five percent
of transaction costs.
4. Transaction Time Frame
5. Land
6. Heterogeneous: every parcel of land is unique so every commercial real estate asset is
unique. However, improvements are rarely identical as unique site characteristics, land use
regulations, and the market often require different solutions from developers.
7. Return Measures
8. Management Intensive
9. Long Production Cycle: it takes time to develop and construct new commercial real estate
assets to meet the needs of the expanding population. This results in the real estate supply
being relatively slow to respond to changes in demand (i.e. inelastic supply).
10. Highly Regulated
Inelastic supply
there is a limited supply. To illustrate, many cities are geographically constrained and have a
Land Use Bylaw that limits the ability to change the use of a parcel of land. This results in a
relatively inelastic supply of land for commercial purposes. Inelastic supply means the supply
cannot readily adjust to changes in demand or price.
four major commercial real estate asset product types according to Real Capital Analytics
and correct answers verified and
graded A+
Which of the following are attributes of commercial real estate assets?
A- Land, transaction time frame, transaction costs, expensive f/high-value
B- Long-lasting, highly regulated, long production cycle
C- management intensive, heterogeneous, return measures
D- All answers are correct
All answers are correct
Which of the following rates should be used when performing a discounted cash flow analysis
when an investor wants to determine the market value of a commercial real estate asset?
A- Opportunity cost of capital rate
B- Effective annual interest rate
C- Market discount rate
D- Capitalization rate
C- Market discount rate
,Which of the following statements about adjusting the debt-to-equity ratio in the capital stack is
correct?
A- Adjusting the debt-to-equity ratio does not change the overall expected rate of return
B- Decreasing the amount of debt decreases the overall expected rate of return
C- Increasing the aount of equity increases the overall expected rate of return
D- All answers are correct
Adjusting the debt-to-equity ratio does not change the overall expected rate of return
What is the purpose of a leveraged discounted cash flow analysis?
A- To value the equity portion of a real estate asset's financial structure
B- To value the debt portion of a real estate asset's financial structure
C- To estimate the overall rate of risk in acquiring the real estate asset
D- To estimate the overall rate of return for acquiring the real estate asset
To value the equity portion of a real estate asset's financial structure
,How do I calculate the monthly mortgage payments for semi-annual compounding.
Set 2 P/Yr
Annual interest rate SHIFT-NOM%
SHIFT EFF%
12 SHIFT P/YR
SHIFT NOM%
Enter positive morgage amount
total # of months N
PMT (to get monthly payment amount)
So, first take NOM% (annual rate at 2P/Y), change it to EFF%, then change to 12 P/Y get new
NOM%....add positive PV, add N (months)
Commercial real estate assets have a number of attributes that make them unique relative to
other types of investments. These attributes include the following: (x10)
1. They involve land
2.Transaction time frames are long
3. Transaction costs are high
4. they are expensive
5. They are long lasting
6. Highly regulated
7. have a long production cycle
8. are management intensive
9. are heterogeneous
10. Involve measuring return on investment
, 1. Long-lasting, Durable Goods
2. Expensive, High-valued (left for well capitalized investors)
3. Transaction Costs: Due diligence and commissions alone comprise about three to five percent
of transaction costs.
4. Transaction Time Frame
5. Land
6. Heterogeneous: every parcel of land is unique so every commercial real estate asset is
unique. However, improvements are rarely identical as unique site characteristics, land use
regulations, and the market often require different solutions from developers.
7. Return Measures
8. Management Intensive
9. Long Production Cycle: it takes time to develop and construct new commercial real estate
assets to meet the needs of the expanding population. This results in the real estate supply
being relatively slow to respond to changes in demand (i.e. inelastic supply).
10. Highly Regulated
Inelastic supply
there is a limited supply. To illustrate, many cities are geographically constrained and have a
Land Use Bylaw that limits the ability to change the use of a parcel of land. This results in a
relatively inelastic supply of land for commercial purposes. Inelastic supply means the supply
cannot readily adjust to changes in demand or price.
four major commercial real estate asset product types according to Real Capital Analytics
