CPM Asset Management and Investment Analysis 2

Question 1

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

Accepted Answer

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

Answer

Asset managers handle day-to-day tenant relations while property managers focus on investment strategy

Answer

Asset managers only work with residential properties while property managers work with commercial assets

Answer

Asset managers are licensed brokers while property managers are not required to be licensed

Question 2

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

Accepted Answer

Income and expense statement (operating statement)

Answer

Balance sheet

Answer

Cash flow statement

Answer

Capital expenditure report

Question 3

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

Accepted Answer

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

Answer

The total return including appreciation over the holding period

Answer

The cap rate applied to the levered position

Answer

The ratio of NOI to the total acquisition price

Question 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?

Accepted Answer

$370,000

Answer

$400,000

Answer

$430,000

Answer

$570,000

Question 5

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

Accepted Answer

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

Answer

The use that generates the most rental income regardless of legal constraints

Answer

The current use of the property as designated by the local zoning authority

Answer

The use preferred by the current tenant base

Question 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?

Accepted Answer

8

Answer

6

Answer

10

Answer

12

Question 7

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

Accepted Answer

Gross collected rents

Answer

Net operating income

Answer

Property appraised value

Answer

Total capital expenditures