1. An investor is trying to decide between two almost identical commercial properties, property A and property B. Property A has a cap rate of 10 and property B has a cap rate of 5. She must consider the possibility that the annual net operating income of property A is less certain or that the asking price for property B is too high or both.
True
False
2. If an investor/manager believes she can increase the net operating income of a building then she would probably view the current cap rate on the building as low and a potentially good investment. While other investors might see the property as overvalued.
True
False
3. Credit ratings are assigned by the ratings agencies Moody’s and Standard and Poor’s to private companies and are an indication of the ability of the company to honor its financial commitments. Both of these rating agencies are divisions of the Federal Reserve Bank of New York.
True
False