If an Investor Owned an Equity Position in a Building

question 21

Multiple Choice

If an investor owned an equity position in a building and wanted to increase value using leverage he could do so by either leveraging the property or borrowing personally.However,leverage is usually applied at the property,not the personal level because:

• A) the investor could make the personal loan against cash flows from the property,leaving the property available as collateral for additional loans
• B) the investor cannot take personal loans to leverage an increased value based on cash flows
• C) leverage can be created cheaply from personal loans; it is not added value
• D) personal loans cannot be applied to cash flows; only to real property

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Definitions:

Sclerenchyma

Cells that provide strength and support in the plant body, are often dead at maturity, and have extremely thick walls; includes fibers and sclereids.

Phloem

The vascular tissue in plants that conducts sugars and other metabolic products downward from the leaves.

Xylem

A type of vascular tissue in plants that transports water and dissolved minerals from the roots to the rest of the plant.

Alpha-Galacturonic Acid

A component of pectin, a polysaccharide found in the cell walls of plants, involved in maintaining cell structure and rigidity.