All of the Following Are Strategic Reasons to Use Financial

question 1

Multiple Choice

All of the following are strategic reasons to use financial leverage when investing in real estate, except:

• A) Leverage increases your expected total return
• B) You can lever your "human capital" as a property manager
• C) You can obtain valuable interest tax shields
• D) You can diversify by investing in a greater variety of risky assets

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Definitions:

Revenue Variance

The difference between the actual revenue earned and the expected revenue that was budgeted for a specific period.

Actual Revenue

The real income that a company generates from its business activities, reported during a specific period.

Static Planning Budget

A budget designed for a single level of activity and does not change even if the level of activity changes.

Fixed Costs

Expenses that remain constant for a company irrespective of the level of production or sales.