1 for specific request mail
REAL 5090 UGA Test 1 Questions and Correct
Answers | Latest Update
space market / usage market / rental market
Ans: the market for the usage of (or right to use) real property (land and
built space)
law of one price
Ans: at a given point in time, the same thing can't trade at different
prices
Assignment Expert
- this only applies within a single well-integrated market
Guru01 - Stuvia
ways real estate can be segmented
Ans: - metropolitan areas (MSA)
2026
- property usage type
replacement cost of rent
©
Ans: the level of rent that is just sufficient to stimulate profitable new
development in the market
tends to be the LR equilibrium rent in the market
if rents rise above the replacement cost level...
Ans: development will be profitable (and will occur quickly in most US
cities) and rents will go down to the LR equilibrium level quickly
kinked supply curve
Ans: when the supply function has a "corner" in it
- starts off inelastic because space can't easily be reduced
, 2 for specific request mail
- the kink occurs when rent level = LR marginal cost of adding additional
space
- as LR marginal cost falls, rents will fall and vice versa
why are real estate space markets cyclical?
Ans: bc of the kinked supply curve - there are periods of excess supply
followed by periods of tight markets
if there is a decline in demand for real estate...
Ans: markets rents will rapidly decline through increases in vacancies
Assignment Expert
and concessions like free rent when signing a lease
Guru01 - Stuvia
location rent
Ans: the amount people are willing to pay in real dollars per year for
use of the same location
2026
when location rent is declining...
Ans: a location's centrality is dropping
©
(this can cause the supply curve to decline to the right of the kink point)
where does the LR supply function fall?
Ans: it is nearly level to the kink point and might rise/fall a little
debt assets
Ans: the rights to future cash flow to be paid out by borrowers on loans
they have taken out
equity assets
Ans: give owners a residual claim on the cash flows generated by the
underlying asset
REAL 5090 UGA Test 1 Questions and Correct
Answers | Latest Update
space market / usage market / rental market
Ans: the market for the usage of (or right to use) real property (land and
built space)
law of one price
Ans: at a given point in time, the same thing can't trade at different
prices
Assignment Expert
- this only applies within a single well-integrated market
Guru01 - Stuvia
ways real estate can be segmented
Ans: - metropolitan areas (MSA)
2026
- property usage type
replacement cost of rent
©
Ans: the level of rent that is just sufficient to stimulate profitable new
development in the market
tends to be the LR equilibrium rent in the market
if rents rise above the replacement cost level...
Ans: development will be profitable (and will occur quickly in most US
cities) and rents will go down to the LR equilibrium level quickly
kinked supply curve
Ans: when the supply function has a "corner" in it
- starts off inelastic because space can't easily be reduced
, 2 for specific request mail
- the kink occurs when rent level = LR marginal cost of adding additional
space
- as LR marginal cost falls, rents will fall and vice versa
why are real estate space markets cyclical?
Ans: bc of the kinked supply curve - there are periods of excess supply
followed by periods of tight markets
if there is a decline in demand for real estate...
Ans: markets rents will rapidly decline through increases in vacancies
Assignment Expert
and concessions like free rent when signing a lease
Guru01 - Stuvia
location rent
Ans: the amount people are willing to pay in real dollars per year for
use of the same location
2026
when location rent is declining...
Ans: a location's centrality is dropping
©
(this can cause the supply curve to decline to the right of the kink point)
where does the LR supply function fall?
Ans: it is nearly level to the kink point and might rise/fall a little
debt assets
Ans: the rights to future cash flow to be paid out by borrowers on loans
they have taken out
equity assets
Ans: give owners a residual claim on the cash flows generated by the
underlying asset
