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What is the danger to a professional investor if a Capitalization Rate or Cap Rate was 2 0 percent on a property, while similar properties

What is the danger to a professional investor if a Capitalization Rate or Cap Rate was
20 percent on a property, while similar properties in the rest of the neighborhoods had Cap
Rates averaging 6.00%?
A) A higher-than normal Cap Rate has no risk and it is a better investment.
B) A higher-than-normal Cap Rate is very risky and the property is probably located in a
very bad neighborhood.
C) A higher-than-normal Cap Rate shows that the property was overpriced. In other words,
the investor got ripped off.
D) A higher-than-normal Cap Rate automatically means the investor is dealing with a
property in an affluent neighborhood and the potential for further increases in value is great

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