The Value of a Property Can Be Thought of as Having

question 28

Multiple Choice

The value of a property can be thought of as having two components, a land component and a building component. Since the land component of the original cost basis is not depreciable, it is important to understand how much of the property's value is typically attributed to the land for tax purposes. As a general rule, the value of land constitutes what percentage (expressed as a range) of the total value of a commercial property?

• A) 0% to 10%
• B) 10% to 30%
• C) 30% to 50%
• D) 50% to 70%

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Definitions:

Spread

The difference between the bid and the ask price of a security or the difference between the interest rate paid for deposits and received for loans.

Institutional Investors

Organizations such as banks, insurance companies, and pension funds that make substantial investments on the capital markets.

Major Exchanges

The leading stock exchanges worldwide, such as the New York Stock Exchange and the Nasdaq, where securities are bought and sold.

Price Setting

The process by which a company determines the selling price of its products or services.