Mike Has Decided to Purchase a Real Estate Property That

question 21

Multiple Choice

Mike has decided to purchase a real estate property that is expected to generate a net operating income (NOI) of $63,000 per year.With a 9 percent cap rate,the property would have an estimated value of _____.

• A)$630,000
• B)$187,000
• C)$700,000
• D)$965,000
• E)$235,000

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Definitions:

Coefficient of Correlation

A numerical metric evaluating the magnitude and orientation of a linear correlation between two variables, with values spanning from -1 to 1.

Capital Allocation Line

A graph showing risk-versus-return profiles of different portfolios, including the risk-free rate and a combination of risky assets, guiding optimal asset allocation.

Efficient Frontier

A concept in modern portfolio theory demonstrating the set of optimal portfolios offering the highest expected return for a given level of risk.

Portfolio Standard Deviation

A measure of the dispersion of the returns of a portfolio, indicating its risk.