Reading 52: Income-Property Analysis and Appraisal - LOS class, statements, describes, following, valuation

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1.Which of the following statements most accurately describes the capitalization rate used for real estate valuation?

A)   The capitalization rate is the rate of return that equity investors require on similar-risk real estate investments.

B)   The capitalization rate is one plus the rate of return that equity investors require on similar-risk real estate investments.

C)   The capitalization rate is one plus the constant growth rate of net operating income.

D)   The capitalization rate is the rate of return that equity investors require on similar-risk real estate investments net of the expected constant growth rate of net operating income.

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答案和详解如下：

1.Which of the following statements most accurately describes the capitalization rate used for real estate valuation?

A)   The capitalization rate is the rate of return that equity investors require on similar-risk real estate investments.

B)   The capitalization rate is one plus the rate of return that equity investors require on similar-risk real estate investments.

C)   The capitalization rate is one plus the constant growth rate of net operating income.

D)   The capitalization rate is the rate of return that equity investors require on similar-risk real estate investments net of the expected constant growth rate of net operating income.

The correct answer was D)

The capitalization rate (C) is the rate of return that equity investors require on similar-risk real estate investments (k) net of the expected constant growth rate of net operating income (g). That is, C = k - g.