true or false: financial decision making is based on the concept of wealth maximization - ANSWERtrue
true or false: the internal rate of return is the interest rate for which a project's net present value (NPV) is exactly equal to zero - ANSWERtrue
true or false: initial equity is the purchas...
true or false: financial decision making is based on the concept of wealth maximization -
ANSWERtrue
true or false: the internal rate of return is the interest rate for which a project's net present value
(NPV) is exactly equal to zero - ANSWERtrue
true or false: initial equity is the purchase price less any debt used to complete the purchase -
ANSWERtrue
which of the following is not a characteristic of risk?
a) the later the cash flows are expected to be received, the greater the risk
b) the greater the uncertainty, the greater the risk
c) the shorter the expected holding period, the greater the risk
d) the greater the potential risk, the greater the potential return investors will expect - ANSWERc
to reduce the risk to the borrower, adjustable rate mortgages typically have
a) a wraparound clause
b) an interest rate cap
c) negative amortization
d) a prepayment clause - ANSWERb
when a mortgage loan with level periodic payments has been completely repaid by the maturity
date, it is said to be
a) fully amortized
b) capitalized
c) reamortized
d) depreciated - ANSWERa
according to the NPV decision rule, an investor who is considering a project which has a net present
value of $1 would
a) reject the investment
, b) accept the investment
c) be indifferent between accepting or rejecting the investment
d) lose more money on the investment - ANSWERb
under the current tax rate law, residential real estate investments have a depreciable life of how
many
a) 27 years
b) 39 years
c) 31.5 years
d) 27.5 years - ANSWERd
true or false: the vacancy rate is defined as the amount of occupied space as a percentage of the
total amount of space - ANSWERfalse
true or false: the investor's required rate of return is the same as the interest rate on available
mortgage loans - ANSWERfalse
true or false: financial leverage occurs from all cash purchases - ANSWERfalse
suppose an investor expects to sell a property two years from now for $84700. if the investor
required a 10% rate of return, how much is that property worth to the investor today?
a) $93,170
b) $70,000
c) $84,700
d) $77,000 - ANSWERb
you have made 60 monthly payments of $500 at 8.5% annual interest. you have 300 payments left on
the loan. if you sell the house and must pay off this loan, how much do you owe the lender?
a) $65,027
b) $24,371
c) $18,000
d) $62,094 - ANSWERd
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