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CCIM 101 - Financial Analysis Questions & Answers, Passed!!
Question 1: What are the four basic components of NOI?
CORRECT ANSWER : 1 - Potential rental income (PRI)
- - Vacancy and credit losses
- - Other income
- - Operating expenses
Question 2: [XXXX] is used to determine a property's PRI
(Potential Rental Income.)
CORRECT ANSWER : Lease analysis
Question 3: PRI equals NOI in what property/tenant scenario?
CORRECT ANSWER : If the property has one tenant with a
long-term absolute NNN lease.
Question 4: [XXXX] is PRI minus vacancy and collection
losses.
CORRECT ANSWER : ERI (Effective Rental Income)
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Question 5: 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 6: True or False: Depreciation is included in Operating Expenses.
CORRECT ANSWER : False
Question 7: True of False: Principal and interest on debt financing is included in Operating Expenses
CORRECT ANSWER : False. This is an expense of ownership,
not an operating expense.
Question 8: True or False: Capital Expenditures are included in Operating Expenses.
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CORRECT ANSWER : False. They are written off over a period
of years.
Question 9: True of False: Income Taxes are included in Operating Expenses
CORRECT ANSWER : False
Question 10: True of False: Reserves for Replacement are included in Operating Expenses
CORRECT ANSWER : False
Question 11: True of False: Tenant Improvements (TI) are included in Operating Expenses
CORRECT ANSWER : False
Question 12: True of False: Repairs and Maintenance are included in Operating Expenses
CORRECT ANSWER : True
Question 13: True of False: Property insurance is included in Operating Expenses
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CORRECT ANSWER : True
Question 14: True of False: Utilities are included in Operating Expenses
CORRECT ANSWER : True
Question 15: 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.
Question 16: Cap rate + growth = [XXXX]?
CORRECT ANSWER : Yield
Question 17: True of false: Leasing commissions are included in Operating Expense?
CORRECT ANSWER : False - they are included in Cash Flow
Before Taxes.