Real Estate Finance – True or False?

1. Real Estate is less risky than T-Bills.
2. To value a cash flow that changes over time, it is better to use a NPV calculation than a direct capitalization of the In-Place NOI.
3. CMBS is a form of CDO.
4. A property is purchased for $ 350,000. Based on an annual growth rate of 3%, the resale value at the end of year 10 would be $ 456,671.
5. If a property owner borrows money at a rate that is higher than the equity yield rate, negative leverage exists.
6. The Federal Home Loan Mortgage Corporation’s (FHLMC) primary purpose is to provide liquidity for conventional mortgage originators just as FNMA and GNMA did for originators of FHA – VA mortgages.

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