Q&A Hero

Q: Consider the following scenario. The Swiss franc is fixed to the U.S. dollar. Market pressures lead to a move away from the peg. Which of the following can be used to restore the previous peg? a. The Swiss central bank can use a commodity (such as gold) to back the previous peg. b. The Swiss government can lower domestic prices to offset import pressures. c. Allow the exchange by the market and in the long run the peg will be restored. d. The Swiss central bank can purchase or sell U.S. dollars.

Q: Introducing new business practices to a market is called X and generates Y i) market transparency ii) first mover advantage iii) technology transfer a) i,iii b) i,ii c) ii,iii d) iii,ii

Q: Consider the following scenario. The Swiss franc is operating under a managed float exchange system. Under this system, what actions can the Swiss central bank take to influence the current exchange? a. Purchase or sell foreign currencies to bring the currency in line with its desired value b. Announce a new target exchange rates c. Commit to a new fixed rate against the current basket of foreign currencies d. Set guidelines for when inflationary pressures will force action on money supply changes

Q: Which strategies can protect against currency risk? i) currency swap ii) mortgage and rent payments in the same currency iii) mortgage and rent payments in different currencies a) i,iii b) i,ii c) ii,iii d) all of the above

Q: What is seignorage? a. The reward for holding foreign currency reserves. b. The difference between printing money and the return to the assets it acquires. c. The special interest rates associated with Special Drawing Rights. d. The process of adopting a currency peg.

Q: The following regulation impacts the willingness of foreign investors to invest in the US property market? a) FIRPTA b) IFRS c) GAAP d) USBLM

Q: The gold standard eliminates the possibility of a balance of payments disequilibrium by: a. Changing the peg value of the currency to an ounce of gold. b. Inflating prices in countries with net inflows of gold and deflating prices in countries with net outflows. c. Shifting trade to the British pound. d. Encouraging the discovery of gold deposits.

Q: Intrinsic to a strong securities market are all of the following except a) liquidity b) transparency c) volatility d) regulation

Q: Referring to Figure 2.1, the pound per dollar exchange rate starts at 2.00. Assume that an increase in the taste for U.S. imports by U.K. residents leads to a shift in the supply of pounds. How many pounds will the Bank of England need to purchase to restore the exchange of 2.00? a. 0.2 billion b. 1 billion c. 2 billion d. 4 billion

Q: Global property investment is always more profitable than domestic investing? True or False

Q: Which of the following is not involved in land registration? a) title b) repatriation c) deed d) survey

Q: Referring to Figure 2.1, the pound per dollar exchange rate starts at 2.00. Assume that an increase in the taste for U.S. imports by U.K. residents leads to a shift in the supply of pounds. If the Bank of England wishes to intervene by buying pounds to restore the peg of $2.0/pound, what distance represents that intervention? a. A to B b. B to A c. A to D d. D to B

Q: Which of the following is not a particular risk of international investing? a) Geopolitical b) Seismic c) Currency d) Nationalization

Q: The U.S. dollar is called a ________ because it is often used as a medium of exchange in international markets. a. Transit currency b. Main currency c. Reserve currency d. Target currency

Q: Overseas investment can provide which of the following benefits a) Diversification b) Exposure to growth markets c) Access to additional assets d) All of the above

Q: Following the breakdown of the Bretton Woods system, the major currency countries: a. Moved to the gold standard b. Temporarily pegged currencies to the Swiss Franc c. Moved to a free market floating arrangement d. Introduced silver as an alternative backing to the dollar

Q: ValueCo is a large retailers suffering from a downturn in sales. It operates a portfolio of 800 stores across the United States, half are leased, most at below market rents and the balance have been owned for an average of twenty years. The new CEO has been tasked with turning around the company and as vice president of real estate you must think through what you can do to contribute to the turn around?

Q: Which of the following currencies do not exist in physical form? a. U.S. Dollar b. Swiss Franc c. Euro d. Special Drawing Rights

Q: SuperApp is the next generation internet company which serves 100 million unique customers every day. People depend on SuperApp having near 100% availability of its services. The companys technology center is said to use more electricity than many small countries. SuperApp has outgrown its current headquarters and needs to move. Right out of business school, the CEO asks you to prepare a white paper on what needs to be considered in any such move.

Q: The International Monetary Fund was created at the beginning of the: a. Bretton Woods system b. Gold standard c. Interwar period d. Smithsonian agreement

Q: You are the CEO of New Corp, a tech start up located in next to Ivy University in a suburb of a major coastal city in the northeast. Red State, in the deep south has sent their Secretary of Economic Development to visit to convince you to locate deep in the heart of the South. The incentive package is compelling. What factors should you consider?

Q: During the gold standard, national money supplies were constrained by: a. International treaties b. The growth of trade c. Commodity indexes d. The growth of the stock of gold

Q: Why might a company decide to rent from a landlord rather than own its properties? a) the company has limited access to capital b) the companys capital can be better applied to another use c) the landlord may have access to capital at a lower rate than the company. d) all of the above.

Q: The European Monetary System was established in 1979 to form a common currency for all member countries to be managed by a European Central Bank.

Q: Countries with floating exchange rates tend to have large, closed economies and trade largely with a single foreign country.

Q: LEED is a rating system for buildings and includes all but one of the following criteria: a) conservation of energy and water and b) improved property net operating income c) improvement of health and safety for occupants d) reduction of greenhouse gasses and landfill waste

Q: Dewie, Cheatem and Howe is a major law firm with over 200 partners. Its lease in its west coast high rise is expiring next year and it is considering moving out of Major City to EdgeBurb, a short commute and near where most of its high net worth partners and customers live. EdgeBurb has no income tax while Major City does. Which of the following can Major City offer directly to the law firm? a) Space in an enterprise zone b) industrial development bond financing c) historic tax credit d) tax increment financing

Q: Countries use reserve currencies as an international unit of account, a medium of exchange, and a store of value.

Q: Shoppers Paradise, a major retailer, has excellent locations and owns its stores subject to mortgage financing. There is a new competitor, Buyers Heaven, and the company requires capital to renovate its stores? Which is the best strategy for Shoppers Paradise to use? a) Approach its landlord for tenant allowances b) Approach its bank for a secured credit line c) Enter into a sale leaseback transaction d) Ask the local government for property tax abatements

Q: Seigniorage is the system where the dominant money producer limits the supply of money to leverage foreign currencies.

Q: The economic multiplier is a measurement of which of the following? a) the sales of a relocated company / the government incentives provided b) the rent paid by the new company / the landlords lease incentives c) the total economic activity generated by the new company / the new companys revenues d) the historic tax credit / the cost of building renovation

Q: The International Monetary Fund was created to assist countries with balance of payment difficulties and monitor an adjustable peg system with the U.S. dollar as the anchor currency.

Q: Landlords can supply which incentives for corporate relocation? i) job creation tax credit ii) access to lower cost capital iii) moving allowance iv) tenant allowance v) lease buy-out a) i,ii,iii b) ii,iii,iv,v c) i,iii d) ii,iv

Q: The geographic area that would maximize economic benefits by keeping the exchange rate fixed within the area is a (an): a. Trade union b. Currency board c. Trade bloc d. Optimal currency area

Q: Which is not a factor in choosing a corporate location? a) access to transportation b) sufficient utilities c) availability of skilled labor d) availability of greenhouse gasses

Q: Which of the following exchange rate systems is best suited for a country with trade concentrated with one major country? a. Fixed peg b. Currency standard c. Free floating d. Managed floating

Q: Which of the following did not result from the internet? a) multi-channel retailing b) telecommuting c) value retailing d) just-in-time sourcing

Q: What exchange rate is maintained with a central rate that is frequently adjusted? a. Fixed Peg b. Currency board c. Managed floating d. Crawling bands

Q: Which is a method used by corporations to reduce the amount of property on the companys balance sheet? a) sale-leaseback b) industrial development bond c) historic tax credit d) enterprise zone

Q: Which is not a government incentive used for corporate relocation? a) loan guarantee b) economic impact study c) New Market Tax Credit d) tax incentive financing

Q: Arrange the following currency exchange systems from the one with least independent monetary policy to the most independent monetary policy. I. Horizontal bands II. Currency board III. Fixed peg IV. Free floating a. Free floating, horizontal bands, fixed peg, currency board b. Currency board, horizontal bands, free floating, fixed peg c. Currency board, fixed peg, horizontal bands, free floating d. Horizontal bands, currency board, free floating, fixed peg

Q: Funds available for distribution is primarily an indicator of a) ability to cover interest payments b) ability to cover common dividends c) ability to finance property development d) ability to issue new equity

Q: REITS may invest in assets at which stage of completion? a) land b) projects under development c) construction completed with cash flow d) all of the above

Q: Countries with a floating exchange rate tend have what features? I. Trade concentrated with a single country II. Similar inflation rates with trading partners III. Large, closed economies IV. Trade diversified across many countries a. I only b. I and II c. III and IV d. II, III, and IV

Q: Perfect mobility of factors of production is a requirement for a. Spatially concentrated trade zones b. Optimal currency areas c. Commodity money standards d. Free floating exchange rates

Q: Which of the following is not a major source of REIT capital a) public market equity b) mortgage financing c) issuance of corporate debt d) investment of after tax profits

Q: Destabilizing speculation is the process where a. In a free floating exchange system, speculators cause wide fluctuations to the exchange rate. b. In a fixed peg exchange system, speculators hold foreign reserves too long and destabilize the peg. c. In a free floating exchange system, the International Monetary Fund is forced to issue Special Drawing Rights. d. In a fixed peg exchange system, speculators sell all holdings of Special Drawing Rights.

Q: The REIT concept is a) used in many countries b) limited to companies owning US assets c) declining in appeal to the capital markets d) limited to companies listed in the US

Q: Equity REITs generally concentrate their investment focus by a) property geography b) property type c) life of investment d) all of the above

Q: Referring to Figure 2.2, an increase in the demand for British goods by the U.S. importers has led to pressure on the pound to appreciate against the dollar. If the Bank of England wishes to intervene to maintain a peg of $2.0/pound, what distance represents that intervention? a. A to B b. B to A c. A to C d. B to C

Q: Which of the following asset allocations is not possible for a REIT? a) 100% CMBS b) 30% industrial stock c) 25% of a taxable subsidiary d) 95% real estate

Q: Referring to Figure 2.2, an increase in the demand for British goods by the U.S. importers has led to pressure on the pound to appreciate against the dollar. If the Bank of England wants to maintain a peg of $2.0/pound, what currency should it sell and how much? a. Pounds, 1 billion b. Pounds, 2 billion c. Dollars, 1 billion d. Dollars, 2 billion

Q: Publicly traded REITs are subject to all of the following except a) SEC disclosure requirements b) Generally Accepted Accounting Principles c) Special real estate principles d) Exchange listing requirements

Q: When the United States suspended the convertibility of dollars into gold in 1971, this lead to: a. The collapse of the Bretton Woods system b. Creation of the regional currency boards c. Creation of the International Monetary Fund d. All of the above

Q: Which of the following is not true about REITs? a)..Must have at least 100 owners b)..No five or fewer individuals can own >50% c)..Must pay out 75% of earnings and profits d)..Can have up to 25% of assets in a Taxable REIT sub

Q: Which of the following could be considered a cause of the collapse of the Bretton Woods system? a. The existence of Japanese budget deficits offset currency reserves as the yen become increasingly overvalued. b. The United States gold stock became increasingly too small to meet foreign dollar liabilities. c. Countries in Europe devalued currencies to increase export competitiveness. d. In order to meet reserve requirements imposed by the IMF, France and Germany mandated private holders of gold to purchase U.S. dollars destabilizing the U.S. dollar to gold peg.

Q: Jack McKaid has built a great private real estate company in the warehouse business. He has always dreamed of taking his company public as a REIT. While preparing for the public offering he is approached by one of his competitors who proposes making a significant but non-controlling investment in Jacks business. What factors should Jack consider?

Q: Special Drawing Rights are issued by a. The International Monetary Fund b. The United Nations c. The World Bank d. The Central banks of England, Japan, and the United States

Q: Hyper Development Company builds and sells condominiums at vacation destinations on three continents. An investment banker recently proposed that Hyper restructure as a REIT. What could they have been thinking?

Q: Suppose that under a gold standard, that the price of gold in the United States is $450 per ounce and the price of gold in the United Kingdom is 200 per ounce. The exchange rate is thus: a. 2.25 per dollar b. $0.45 per pound. c. $2.25 per pound. d. 1 per dollar.

Q: The Bretton Woods agreement required that each country, other than the U.S., fix the value of its currency in terms of a(n): a. Ounce of gold b. Common currency c. Commodity basket d. Anchor currency

Q: ProblemEast REITIncome Statement(for period ending December 31, 2010, in millions)Revenues$200Expenses130General and Administrative5Balance Sheet(as of December 31, 2010, in millions)Assets Liabilities Investment in Real Estate (Net)$1,000Long Term Debt$400 Equity Common Shares$600Assets$1,000Liabilities and Net Worth$1,000The debt is interest only with a 5% coupon rate. There are ten million shares outstanding. The shares trade at $80 per share.Calculate debt to market capitalization

Q: The gold standard was an example of: a. An optimum currency area b. A commodity money standard c. A standard currency board d. All of the above

Q: Which of the following statement is correct? a. Since 1974, the major industrial countries have operated under a system of fixed exchange rates based on the gold standard. b. Many developing nations with low inflation rates have pegged their currencies to the U.S. dollar as a way of allowing modest increases in domestic inflation rates. c. Large industrial nations with diversified economies and small trade sectors have generally pegged their currencies to one of the worlds key currencies. d. Today, fixed exchange rates are used primarily by small, developing countries that tie their currencies to a key currency such as the U.S. dollar.

Q: Refer to Figure 2.3. Suppose that the spot exchange rate of British pound is $2.00 per pound. Suppose that the U.S. decreases its imports from the U.K. Under flexible exchange rate system, the Bank of England will: a. let the British pound appreciates b. let the British pound depreciates c. sell pounds and buy dollars in foreign exchange market. d. sell dollars and buy pounds in foreign exchange market.

Q: Refer to Figure 2.3. Suppose that the U.K agreed to peg its currency against the U.S. dollar at $2.00 per pound during the Bretton Woods system. Assume that the U.S. increases its imports from the U.K. As a result, the Bank of England would have to: a. let the British pound appreciates b. let the British pound depreciates c. sell pounds and buy dollars in foreign exchange market. d. sell dollars and buy pounds in foreign exchange market.

Q: Refer to Figure 2.3. Suppose that the U.K agreed to peg its currency against the U.S. dollar at $2.00 per pound during the Bretton Woods system. Assume that the U.S. decreases its imports from the U.K. As a result, the Bank of England would have to: a. let the British pound appreciates b. let the British pound depreciates c. sell pounds and buy dollars in foreign exchange market. d. sell dollars and buy pounds in foreign exchange market.

Q: An umbrella partnership allows all of the following except a) liquidity for owners of privately held properties b) unitholders who can request REIT stock c) sale of real estate as inventory d) tax efficient acquisition of property

Q: If Mexico fully dollarizes its economy, it agrees to: a. print pesos only to finance deficits of its national government. b. use the U.S. dollar alongside its peso to finance transactions. c. have the U.S. Treasury be in charge of its tax collections. d. replace pesos with U.S. dollars in its economy.

Q: What is the fundamental measure of REIT operating performance? a) Net income per share b) debt service coverage c) FFO per share d) IRR

Q: Small nations whose trade and financial relationships are mainly with a single partner tend to utilize: a. pegged exchange rates b. free floating exchange rates c. managed floating exchange rates d. target bands - pegged exchange rates

Q: When purchasing which of the following types of housing does the owner not actually own title to real estate? a) Condominium apartment b) Cooperative apartment c) Single family house d) Townhouse apartment

Q: The Bretton Woods Agreement of 1944 established a monetary system based on: a. Special Drawing Rights and managed floating exchange rates b. Special Drawing Rights and adjustable pegged exchange rates c. gold and managed floating exchange rates d. gold and adjustable pegged exchange rates

Q: In many cases, new housing developments require additional infrastructure. Who pays the cost of building and supporting the infrastructure? a)Developers b)Homebuyers c)Government d)All of the above

Q: Which of the following exchange rate systems is the least flexible? a. Free floating b. Managed floating. c. Currency board d. Fixed peg arrangement

Q: Which of the following would not be used to finance for rent multifamily housing? I)Construction financing II)Mini Perm III)Take out financing IV)Inventory financing V)End loans a) IV, V b) II,III c) III,IV d) I, V e) I,II,III

Q: Consider the market for Chinese currency (yuan). Suppose that the initial equilibrium exchange rate was $0.125 per one yuan. Then assume that American consumers like Chinese products more than before. If Chinas central bank wants to peg the exchange rate at its initial level ($0.125 per yuan), the central bank will have to a. buy yuan and sell dollar. b. sell yuan and buy dollar. c. buy yuan and buy dollar. d. sell yuan and sell dollar.

Q: Securities issued by the following financial institution are guaranteed by the full faith and credit of the US government: a) Freddie Mac b) Ginnie Mae c) Fannie Mae d) Sallie Mac

Q: Which of the following economies has adopted a currency board exchange rate system? a. Malaysia b. South Korea c. China d. Hong Kong

Q: Rent or buy The Andersons want to move to a new apartment in Matrix Cove, a beautiful waterfront development project. Identical rental and for sale units are available. The monthly rent is $2,000 for their chosen unit. Rents have been rising at 3% per year. An identical unit can be purchased for $250,000 with 20% down. The balance can be financed at 5% for 30 years fixed. Property taxes are $250 per month. Other costs of ownership are $500 per month. Both property taxes and other costs have been rising at 3% per year According to their broker, units have been appreciating at 5% per year. Assume income tax rate of 35%, capital gains tax rate of 15% and the costs of selling the home are 6% of the gross sales price. Should they rent or buy assuming they will stay in the unit for five years. Does your view change if the house does not appreciate over the five year period, what if it decreases in value at 2% per year?