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CCIM 101 - FINANCIAL ANALYSIS
UPDATED EXAM QUESTIO NS AND
CORRECT ANSWERS
Question :What are the four basic components of NOI?
Correct answer:1 - Potential rental income (PRI)
- - Vacancy and credit losses
- - Other income
- - Operating expenses
Question :[XXXX] is used to determine a property's PRI
(Potential Rental Income).
Correct answer:Lease analysis
Question :PRI equals NOI in what property/tenant
scenario?
Correct answer:If the property has one tenant with a long-
term absolute NNN lease.
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Question :[XXXX] is PRI minus vacancy and collection
losses.
Correct answer:ERI (Effective Rental Income)
Question :Name some items which are EXCLUDED from
Operating Expenses.
Correct answer:Interest and principal on debt on the
property Depreciation (cost recovery) Capital Expenditures Income Taxes Reserves for Replacement Tenant Improvements
Question :True or False: Depreciation is included in Operating Expenses.
Correct answer:False
Question :True of False: Principal and interest on debt financing is included in Operating Expenses
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Correct answer:False. This is an expense of ownership,
not an operating expense.
Question :True or False: Capital Expenditures are included in Operating Expenses.
Correct answer:False. They are written off over a period
of years.
Question :True of False: Income Taxes are included in Operating Expenses
Correct answer:False
Question :True of False: Reserves for Replacement are included in Operating Expenses
Correct answer:False
Question :True of False: Tenant Improvements (TI) are included in Operating Expenses
Correct answer:False
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Question :True of False: Repairs and Maintenance are included in Operating Expenses
Correct answer:True
Question :True of False: Property insurance is included in Operating Expenses
Correct answer:True
Question :True of False: Utilities are included in Operating Expenses
Correct answer:True
Question :What's the biggest difference between cap rate
and yield?
Correct answer:Cap rate does not factor in eventual sale
proceeds - yield does. If there is a profit on the sale then yield will be higher than cap rate.