Problem
A. What is the complement option type to financial options?
B. What is the name of the point in a decision tree at which new information arrives?
C. List the two major approaches to valuing private commercial real estate equity.
D. Define effective gross income.
E. How does the numerator of a pre-tax discounting approach differ from the numerator of an after-tax discounting approach?
F. How does the equity residual approach to real estate valuation differ from a DCF approach applied to the assets of a real estate project?
G. What are the characteristics that distinguish syndications from other real estate investment vehicles?
H. A real estate project is estimated to offer a 10% after-tax rate of return when the depreciation allowed for tax purposes is equal to the true economic depreciation. In what direction would the expected rate of return change if the depreciation allowed for tax purposes were accelerated relative to the true economic depreci-ation, and why?
I. What is the effect of using appraised prices of real estate values to estimate risk when the appraisals are based on lagged information consisting of varying lengths of time lag?
J. What data (i.e., pieces of information) are required to construct a hedonic price index for real estate?