1. The fee simple value could exceed the leased fee value because

A. Market rents are higher than contract rents on existing leases

B. A higher discount rate is used for the fee simple value estimate

C. Market rents are lower than contract rents fore existing leases

D. Existing tenants have a higher than average credit rating

2. The equivalent annual vacancy rate is found by

A. Averaging the vacancy over the lease term

B. Dividing the first year vacancy by the rental income

C. Averaging the first and last year vacancy

D. Dividing the present value of the vacancy by the present value of the rent

3. The renewal probability on a lease is 75% with 6 months vacant. What is the rent loss if market rent is $18.

A. 2.00

B. 2.25

C. 2.50

D. 2.75

4. Suppose the analyst is doing a 10 year DCF and using a terminal cap rate to estimate the value based on year 11 income. Several leases are rolling over in year 11. This could affect the results in the following way:

A. The estimated resale price may be too low

B. The NOI in year 11 may be too high

C. The estimated value may be too high

D. The leasing commissions in year 11 may be too low

5. A lease premium results when

A. The leased fee value is greater than the fee simple value

B. The fee simple value is greater than the leased fee value

C. Market rents are greater than contract rents

D. A higher discount rate is used to estimate the leased fee value

6. The cost approach implicitly assumes that

A. Leases are at contract rents

B. Leases are at market rents

C. The building is not leased

D. There is a leasehold value

7. If tenants have a higher than average credit rating

A. The fee simple value may be higher than the leased fee value

B. A higher discount rate might be used for the leased fee value estimate

C. The fee simple value may be lower than the leased fee value

D. There is more likely to be a credit loss