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Free CFA Alternative Investments Practice Questions & Answers

550 exam-style Alternative Investments questions. Pick your answer, hit Check answer, and see the worked solution — free to start, no signup.

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Question 31

Which factor most increases operating risk?

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Question 32

The sales comparison approach works best when:

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Question 33

Which is a capital expenditure?

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Question 34

A property’s effective gross income equals:

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Question 35

Which market condition typically raises cap rates?

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Question 36

A property with below-market rents offers:

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Question 37

Which is a lease-up risk?

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Question 38

A property’s terminal value in a DCF is usually estimated by:

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Question 39

Which factor most increases vacancy risk?

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Question 40

A property with high operating leverage has:

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Question 41

A property has potential rent of 1,000,000 and vacancy of 8%. What is effective gross income?

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Question 42

NOI = 600,000 Cap rate = 6% Value = ?

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Question 43

Value = 5,000,000 NOI = 350,000 Cap rate = ?

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Question 44

EGI = 900,000 Operating expenses = 300,000 NOI = ?

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Question 45

A property’s NOI grows 3% annually. Current NOI = 500,000. Next year’s NOI?

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Question 46

Terminal NOI in year 5 = 700,000 Terminal cap rate = 7% Terminal value = ?

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Question 47

Purchase price = 12,000,000 NOI = 900,000 Cap rate = ?

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Question 48

Vacancy = 5% Potential rent = 2,000,000 Other income = 100,000 EGI = ?

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Question 49

Operating expenses = 400,000 NOI = 600,000 EGI = ?

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Question 50

Cap rate = 8% Value = 7,500,000 NOI = ?

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Question 51

A Real Estate Investment Trust (REIT) is required to distribute most of its taxable income because:

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Question 52

A key advantage of investing in listed real estate companies is:

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Question 53

Funds From Operations (FFO) adjusts net income primarily by:

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Question 54

Adjusted Funds From Operations (AFFO) improves on FFO by:

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Question 55

A REIT with a high payout ratio typically:

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Question 56

NAV per share is intended to represent:

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Question 57

A REIT trading at a premium to NAV suggests:

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Question 58

A REIT with high leverage is more exposed to:

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Question 59

Which factor most directly increases a REIT’s cost of capital?

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Question 60

A REIT with short lease terms is more sensitive to:

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Free CFA Alternative Investments Practice Questions & Answers

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Thank you