Is a cap rate the same as an IRR? Which is generally greater? Why?

Q: Distinguish the nominal rate of return from the real rate of return.

A:

Q: What is market interest rate?

A: The interest rate in which borrowers and lenders borrow and lend money to each other is called…

Q: When may a “terminal” cap rate be lower than a “going-in” cap rate? When may it be higher?

A: Terminal cap rate: The cap rate is known as net operating income as a percentage of the property’s…

Q: The difference between the forward rate and the expected future spot rate is called:

A: The forward rate is a price at which the transaction or settlement will take place in the future. It…

Q: According to the single index model, the inflation risk is an example of the:

A: Single Index Model is the type of an asset pricing model which determines the returns on security…

Q: Explain the Characteristics of super floating rate tranche?

A: Tranche:  The is the layers of pooled securities having different risk factors for different level…

Q: Why are the net present value and the internal rate of return models superior to the payback period…

A: The net present value and internal rate of return techniques are superior to the payback method…

Q: Explain The Need for an External Interest Rate?

A: There is a strong need for the external interest rate because it helps in making financial…

Q: What causes the marginal rate of return to change over time?

A: Introduction: Marginal rate of return can be defined as the return attained or earned by holding a…

Q: What is the difference between spot rates andforward rates? When is the forward rate at a premium to…

A: Spot rates are the rates that prevail in the cash market or the rates that are applicable today.…

Q: ected rate of return concept differ from that of the rea

A: There are many method of valuation of stock based on expected rate and realized return and dividends…

Q: Which factor determines how much will be saved at different interest rates?

A: The time preference of the consumer for consumption helps in determining the amount that will be…

Q: According to the pure expectations theory, what would happen if long-term rateswere not an average…

A: Expectation theory: The theory states that the future short term rate will be based on current long…

Q: What security provides a good estimate of the short-term nominalrisk-free rate?

A: T-bills are the treasury bills issued by the government. These bills are risk-free and the rate of…

Q: What will be Effects of Changes in Capital Market Conditions on “Going-In” Cap Rates?

A: Answer: Going in cap rates teaches investors regarding the dividend they receive on the purchased…

Q: What security provides a good estimate of the long-term nominalrisk-free rate?

A: Risk-free Rate is the estimation of the rate that is earned on the securities or the investments…

Q: What will be Effects of Changes in “Going-In” Cap Rates in Response toSupply and Demand?

A: Going-in-cap rate: Going-in-cap rate is the cap rate originated on the ratio of the initial year of…

Q: What is Inflation Premium?

A: Inflation premium: An inflation premium is the piece of the common interest rate coming about…

Q: What is FX rate?

A: The exchange rate is that rate in which price of the country currency is measured in the term of the…

Q: Explain Total Return Swap?

A: Swaps are agreement between different businesses and financial institutions  which is customized as…

Q: Which tranches in a CMO issue are least subject to price variances related to changes in market…

A: The Tranches are various layers of investors in a collateralized mortgage obligation. There are four…

Q: What is the Relationship between Changes in Interest Rates, Investor Returns, and “Going-In”Cap…

A: The question is based on the concept of relation between change in interest rate and its impact on…

Q: Which of the following is not a variable in the basic present value equation? Multiple Choice…

A: Investors are holding securities for the purpose of gaining the returns. The return is calculated…

Q: What is a minimum attractive rate of return (MARR)?

A: Definition: Minimum Attractive Rate of Return (MARR): It is the minimum rate of return on the basis…

Q: What effect does inflation typically have on the EOQ?

A: Economic order quantity (EOQ) is the optimal purchasing order number to keep stock costs, such as…

Q: What is net interest margin(NİM)?

A: There are various profitability ratios

Q: What is the Net Interest Margin (NIM)

A: Net Interest margin (NIM) is percentage of difference between interest income earned on loans and…

Q: The real rate of return is related to O The risk-free rate The risk-free and the inflation rate The…

A: Real rate of returnAn annual profit percentage that is earned on the investment, being adjusted for…

Q: Explain super floating rate tranche?

A: Tranche:  The is the coatings of pooled securities having diverse risk factors for diverse level on…

Q: When the quantity of a financial security supplied or demanded changes at every given interest rate…

A: Explanation: Interest rate shifts (i.e., the price of financial capital) are creating a shift along…

Q: INTEREST RATE RISK  In the context of the repricing gap model, what is the spread effect? How does…

A: The repricing gap model is based on the consideration that a bank's exposure to interest rate risk…

Q: When will the prime rate go up and what factors drive it?

A: The prime rate is the best interest rate you can get, and it's influenced by the economy.   In order…

Q: What are some reasons that net PP&E might grow proportionally tosales, and what are some reasons…

A: Property, plant & equipment are company's long term assets important for the company's…

Q: /hat is the exact rate of return?

A: MACHINE A         PV FACTOR PRESENTVALUE A 0 FIRST COST -8000   8000…

Q: How can we identify the MARR (or external interest rate)?

A: The minimum profit expected by an investor from an investment after considering all the risks and…

Q: Why inflation is considered and have effect in present value?

A: Inflation is the increase in the general price level of the country. It is an important indicator of…

Q: Which of the following theories can be assessed using data that exists at one specific point in…

A: Purchasing power parity: Purchasing power parity (PPP) is a concept which means that exchange rates…

Q: What is the difference between a fixed rate and an adjustable rate money market instrument?

A: Money Market instruments are the financial instruments available to the investor for the short term…

Q: Which of the following is included inthe risk-free rate? O A. the default premium O B. the expected…

A: Risk free rate is the return on the asset that has zero risk associated to it. It is a theoretical…

Q: What is a “required rate of return”? Why is it called the “cost ofmoney” or the “price of money”?

A: The required rate of return can be calculated by two methods, 1) Gordan's growth model  Gordan's…

Q: "Fisher effect defines the relationship between nominal rates, real rates, infiation, default…

A: Fischer effect:- It is an important concept of economics that describes the releationship between…