Part 15 Investment Analysis—Measures of Return

Question 1

If PV is greater than the capital outlay (CO), NPV is x. This investment x investor yield criteria.

Answer 1

positive
exceeds

Question 2

If PV is less than CO, NPV is x. This investment x investor yield criteria.

Answer 2

negative
falls below

Question 3

If PV is equal to CO, NPV is x This investment x investor yield criteria.

Answer 3

equals zero.
just meets

Question 4

As with capitalization rates, the less risky an investment is, the x its yield rate, all other things being equal.

Answer 4

lower

Question 5

Capitalization rates measure return x and return x investment.

Answer 5

on
of

Question 6

Yield rates measure the return x investment.

Answer 6

only on

Question 7

For land and building, investors do not normally distinguish between

Answer 7

Yland, Ybuilding, and Yo.

Question 8

For mortgage/equity, it is almost always the case that xxx because if it weren’t, equity investors could anticipate making more money lending money than buying property.

Answer 8

Ye > Yo > Ym

Question 9

For leasehold/leased fee, it is almost always the case that x for a below-market lease. Yield rates on leaseholds normally are x than Yo because leaseholds are riskier positions.

Answer 9

Yleased fee < Yo

greater

Question 10

Property A has IRR of 13.31 and property B has IRR of 12.98. Which property is more desirable?

Answer 10

Property A has the higher IRR and therefore is more desirable.

Self Study Parts 14-18, question 66