10 Question 5 What is/are the major disadvantage(s) of the NCREIF index? The underlying real estate is leveraged, and therefore the index represents a leveraged return. It is highly correlated with stock returns, and therefore overstates real estate volatility. It is based on appraisals and therefore may understate the true volatility of real estate. It is based on data from the previous fiscal year, and therefore may understate future returns. Both (a) and (b)