CFA Practice Question

There are 195 practice questions for this study session.

CFA Practice Question

Which risk factor does not directly affect the value of the real estate property?

A. leverage.
B. inflation.
C. interest rates.
Correct Answer: A

Both interest rates risk and inflation risk will likely to affect the value of underlying real estate property. Leverage, however, affects returns on investments in real estate but not the value of the property.

User Contributed Comments 2

User Comment
davidt876 depends on whose leverage we talking about. increased average consumer leverage created the 2008 property bubble
khalifa92 it wasn't the main cause, we still have mortgage backed securities and doing fine. primary it was caused by the middle men who started giving out mortgages to people without doing proper check ups of their ability to pay because they were blinded with future profits.
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