Comparing Investment Returns in Risk Analysis
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Questions and Answers

What should investors consider when comparing the investment returns on a real estate investment with returns on other investments?

  • The risk and return on alternative investments (correct)
  • The economic conditions affecting the property
  • The nature of alternative real estate investments
  • The business risk involved in renting space

    • What factor affects some real estate properties more than others in terms of variability of income produced?

  • The type of property and its location (correct)
  • The amount of debt and its cost
  • The lease provisions
  • The diverse tenant mix

    • What increases the financial risk for real estate investors?

  • The diverse tenant mix
  • The amount of debt and its structure (correct)
  • The nature of alternative real estate investments
  • The fluctuations in economic activity

    • What are real estate investors in the business of dealing with?

    <p>Business risk of loss due to economic conditions</p> Signup and view all the answers

    What should an investor decide about an income-producing property?

    <p>Whether the property provides a competitive return</p> Signup and view all the answers

    What type of risk involves the potential for financial loss due to the inability of borrowers or tenants to meet their financial obligations?

    <p>Credit Risk</p> Signup and view all the answers

    Which type of risk is related to the impact of economic and market conditions on real estate values?

    <p>Market Risk</p> Signup and view all the answers

    What type of risk involves the potential difficulty in quickly converting real estate assets into cash without significant loss of value?

    <p>Liquidity Risk</p> Signup and view all the answers

    Which risk is associated with the replacement cost of real estate tending to increase with inflation?

    <p>Inflation Risk</p> Signup and view all the answers

    What type of risk involves potentially taking on liability for cleanup costs that far exceed the value of the property?

    <p>Environmental Risk</p> Signup and view all the answers

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