chapter 6, 7, 8, 9, 10 mcqs from book

Question 1

Investment in Real Estate
Which of the following is not a factor that supports investment in real estate?

a) Real estate has low covariance with other asset classes.
b) The real estate industry can facilitate large capital investments.
c) Debt capital is always available to finance property purchases.
d) Long-term leases can provide low cash flow volatility.
e) Tenant credit risk can be mitigated by having real property collatera

Answer 1

c) Debt capital is always available to finance property purchases.

Question 2

Which of the following is not a tax pass-through entity?

a) Limited partnership
b) General partnership
c) C Corporation
d) S Corporation

Answer 2

c) C Corporation

Question 3

Order these securities according to preference in a liquidation:

I. Preference stock

II. Senior debt

III. Common stock

IV. Convertible debt

a) I, II, III, IV
b) II, IV, I, III
c) I, III, II, IV
d) II, I, IV, III

Answer 3

b) II, IV, I, III

Question 4

Which of the following two credit metrics are defined correctly?

I. Loan-to-value (debt/asset value)

II. Loan-to-value (debt service/asset value)

III. Debt service coverage (cash flow/interest and principal)

IV. Debt service coverage (cash flow/interest)

a) I, III
b) I,IV
c) II, III
d) II, IV

Answer 4

a) I, III

Question 5

Which types of returns are not typically earned by the operating partner in a joint venture?

a) Promoted interest
b) Carried interest
c) Pro rata interest
d) Preferred interest

Answer 5

d) Preferred interest

Question 6

The responsibility for the management of a real estate partnership rests with the:

a) limited partner
b) general partner
c) syndication
d) property manager

Answer 6

b) general partner

Question 7

Which of the following participants has unlimited financial responsibility for the affairs of a real estate partnership?

a) limited partner
b) general partner
c) syndicator
d) property manager

Answer 7

b) general partner

Question 8

Which characteristics are not shared by both partnerships and corporations:

a) limited liability
b) business association
c) centralized management
d) objective to carry on the business and divide the gains

Answer 8

a) limited liability

Question 9

In which of the following would an institutional investor generally earn a preferential return?

a) syndication
b) REIT
c) JV
d) corporation

Answer 9

c) JV