Which of the following is TRUE concerning the capitalization rate? (A) It is an IRR (B) It explicitly considers projected future income and changes in property value over time (C) It expresses the relationship between income and property price at a specific point in time (D) It is the rate of return that investors expect to earn on all capital invested Which of the following statements regarding equity is TRUE? (A) The amount of equity an investor has in a property may change over time if the property value and loan balance changes (B) The amount of equity an investor has in a property depends on the value of the equity the investor has in his or her other investments (C) The outstanding balance on loan on the property does not affect the amount of equity an investor has in the property (D) All of the above A restaurant is for sale for $200,000. It is estimated that the restaurant will earn $20,000 a year for the next 15 years. At the end of 15 years, it is estimated that the restaurant will sell for $350,000. Which of the following would be MOST LIKELY to occur if the investor’s required rate of return is 15 percent? (A) Investor would pursue the project (B) Investor would not pursue the project (C) Investor would pursue the project if the holding period were longer than 15 years (D) Not enough information provided Which of the following is FALSE regarding an expense stop? (A) All operating expenses are covered by the stop (B) The passthrough is based on the tenant’s percentage of total leasable area (C) Expenses to be included must be agreed upon and included in the lease (D) The stop is often based on the actual amount of operating expenses at the time the lease is signed