6. The loan-to-value ratio measures the percentage of the acquisition price (or current market value) encumbered by debt. To protect their invested capital in the event that property values do fall, commercial mortgage lenders generally require that the senior mortgage not exceed approximately what percentage of the acquisition price?

a. 60% b. 70% c. 80% d. 90%

7. Unlike the debt coverage ratio, the debt yield ratio (DYR) is not affected by the interest rate or amortization period of the loan; the DYR is simply a measure of how large the NOI is relative to the loan amount. Lenders who rely on this ratio are typically willing to accept a minimum DYR of

a. 10% b. 20% c. 60% d. 80%

8. The placement of nonrecurring capital expenses in pro forma cash flow projections has not been standardized. The modern treatment of capital expenditures in investment analysis is to treat capital expenditures:

a. above-line b. below-line c. in-line d. out-of line

9. The debt coverage ratio is used to indicate how much the NOI can decline before it will not cover the debt service on the property. DCRs can vary based on competition within a particular market, lenders usually seek a minimum DCR of:

a. 0.90 b. 1.00 c. 1.20 d. 1.45

10. You are purchasing a property for $500,000. Calculate the cash down payment required to purchase the specific property. Loan Amount: 80% of purchase price, Up-front financing costs: 2.5% of loan amount.

a. $136,250 b. $110,000 c. $90,000 d. $100,000