The Going-In Capitalization Rate Can Vary Significantly by Property Quality

question 23

Multiple Choice

The going-in capitalization rate can vary significantly by property quality. Which of the following classes of properties within a particular property type would be expected to have the lowest cap rates?

• A) First tier properties
• B) Second tier properties
• C) Third tier properties
• D) Cap rates would be equal across all classes within the same property type

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Definitions:

National Industrial Recovery Act

A law passed in 1933 as part of the U.S. New Deal to stimulate economic recovery, establish fair competition, and reduce unemployment.

Unconstitutional

An action or legislative act that is deemed to be in violation of the constitution of a country.

Labor Unions

Organizations formed by workers to protect their rights and interests through collective bargaining with employers.

Wagner Act

A foundational piece of labor legislation in the United States, officially known as the National Labor Relations Act of 1935, that established the rights of workers to form unions and engage in collective bargaining.