2
FIN402 Newest Exam with precise detailed solutions || || || || || ||
SPLAT Business Objectives - ✔✔Safety (Capital Preservation)
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Periodic Return (Cash Flow) || || ||
Leverage (Borrowed Funds) || ||
Appreciation (Hedge Against Inflation) || || ||
Tax Shelter (Income Tax Advantage)
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High Risk and potentially high reward during a relatively short holding period. The return
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is typically achieved at the time of sale from the profit made in selling the property -
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✔✔Speculation
Typically extends for a longer period of time. Five fundamental investment objectives
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(SPLAT) - ✔✔Investment || ||
What distinguishes speculation from investment - ✔✔Short term cash flow
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An investor wants a rate of return on the asset that exceeds the cost of borrowed funds.
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What is the ownership goal - ✔✔Leverage
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An owner seeks an investment in an asset that will produce a reliable cash flow over the
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next ten years. The owner is likely seeking a ______ objective - ✔✔Periodic return
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, 2
_______ policy is the means by which a government adjusts its spending levels and tax rates
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to monitor and influence a nation's economy. - ✔✔Fiscal
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The _____ rate triggers movement in commercial mortgage rates - ✔✔T-Bill
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This phase of the real estate cycle tends to occur after periods of prosperity in the business
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cycle - ✔✔Overbuilding || ||
The most commonly used method of rate escalation other than negotiated increases
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established at lease inception is the - ✔✔Consumer Price Index (CPI)
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The ______ is the most widely tracked government debt instrument in finance - ✔✔10 Year
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Treasury Rate
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The Prime Rate is typically _____ above the Federal Funds Rate - ✔✔300 basis points (3%)
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In a stabilized market, when interest rates are low or moderate, real estate value is ______
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relative to income - ✔✔Greater || || || ||
As interest rates decline, real estate values - ✔✔Rise
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Investors are anticipating that properties will appreciate at a rate greater than the -
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✔✔Inflation rate ||
Generally speaking, interest rates go up and down in the same direction as the -
|| || || || || || || || || || || || || || ||
✔✔Inflation rate ||
FIN402 Newest Exam with precise detailed solutions || || || || || ||
SPLAT Business Objectives - ✔✔Safety (Capital Preservation)
|| || || || || ||
Periodic Return (Cash Flow) || || ||
Leverage (Borrowed Funds) || ||
Appreciation (Hedge Against Inflation) || || ||
Tax Shelter (Income Tax Advantage)
|| || || ||
High Risk and potentially high reward during a relatively short holding period. The return
|| || || || || || || || || || || || || ||
is typically achieved at the time of sale from the profit made in selling the property -
|| || || || || || || || || || || || || || || || ||
✔✔Speculation
Typically extends for a longer period of time. Five fundamental investment objectives
|| || || || || || || || || || || ||
(SPLAT) - ✔✔Investment || ||
What distinguishes speculation from investment - ✔✔Short term cash flow
|| || || || || || || || ||
An investor wants a rate of return on the asset that exceeds the cost of borrowed funds.
|| || || || || || || || || || || || || || || || ||
What is the ownership goal - ✔✔Leverage
|| || || || || ||
An owner seeks an investment in an asset that will produce a reliable cash flow over the
|| || || || || || || || || || || || || || || || ||
next ten years. The owner is likely seeking a ______ objective - ✔✔Periodic return
|| || || || || || || || || || || || ||
, 2
_______ policy is the means by which a government adjusts its spending levels and tax rates
|| || || || || || || || || || || || || || ||
to monitor and influence a nation's economy. - ✔✔Fiscal
|| || || || || || || || ||
The _____ rate triggers movement in commercial mortgage rates - ✔✔T-Bill
|| || || || || || || || || ||
This phase of the real estate cycle tends to occur after periods of prosperity in the business
|| || || || || || || || || || || || || || || || ||
cycle - ✔✔Overbuilding || ||
The most commonly used method of rate escalation other than negotiated increases
|| || || || || || || || || || || ||
established at lease inception is the - ✔✔Consumer Price Index (CPI)
|| || || || || || || || || ||
The ______ is the most widely tracked government debt instrument in finance - ✔✔10 Year
|| || || || || || || || || || || || || ||
Treasury Rate
|| ||
The Prime Rate is typically _____ above the Federal Funds Rate - ✔✔300 basis points (3%)
|| || || || || || || || || || || || || || ||
In a stabilized market, when interest rates are low or moderate, real estate value is ______
|| || || || || || || || || || || || || || || ||
relative to income - ✔✔Greater || || || ||
As interest rates decline, real estate values - ✔✔Rise
|| || || || || || || ||
Investors are anticipating that properties will appreciate at a rate greater than the -
|| || || || || || || || || || || || || ||
✔✔Inflation rate ||
Generally speaking, interest rates go up and down in the same direction as the -
|| || || || || || || || || || || || || || ||
✔✔Inflation rate ||
