Practice Test GeeksCPM - Certified Property Manager Practice Test
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Asset Management and Investment Analysis Flashcards

7 cards from real CPM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Asset Management and Investment Analysis flashcards as text

  1. What is the primary difference between an asset manager and a property manager in real estate?

    Answer: Asset managers focus on investment strategy and maximizing owner returns while property managers handle daily operations

    Asset managers focus on maximizing the long-term value and return on the real estate investment, while property managers handle the day-to-day operational aspects of running the property.

  2. Which financial statement shows a property's revenues and expenses over a specific period of time?

    Answer: Income and expense statement (operating statement)

    The income and expense statement (operating statement) reports all revenues and expenses over a specific accounting period, showing the property's profitability.

  3. When performing a property analysis, what does the term 'equity dividend rate' (also called cash-on-cash return) measure?

    Answer: The before-tax cash flow as a percentage of the initial equity invested

    The equity dividend rate (cash-on-cash return) measures before-tax cash flow as a percentage of the equity (cash) initially invested, reflecting the immediate yield on the investor's down payment.

  4. A property has a gross potential income of $600,000, vacancy and credit loss of $30,000, and operating expenses of $200,000. What is the NOI?

    Answer: $370,000

    Effective Gross Income = $600,000 - $30,000 = $570,000; NOI = $570,000 - $200,000 = $370,000.

  5. Which of the following best describes the 'highest and best use' concept in real estate asset management?

    Answer: The legally permissible, physically possible, financially feasible, and maximally productive use of a property

    Highest and best use is the legally permissible, physically possible, financially feasible, and maximally productive use that results in the highest property value.

  6. What is the Gross Rent Multiplier (GRM) of a property with a market value of $1,200,000 and annual gross rents of $150,000?

    Answer: 8

    GRM = Market Value ÷ Annual Gross Rents = $1,200,000 ÷ $150,000 = 8.

  7. In a management agreement, the asset management fee is typically structured as a percentage of which financial measure?

    Answer: Gross collected rents

    Property management fees are most commonly calculated as a percentage of gross collected (effective) rents, aligning the manager's compensation with rent collection performance.