CFA Practice Question

There are 136 practice questions for this study session.

CFA Practice Question

The credit quality of a commercial property portfolio is determined by the credit quality of the ______.

A. underlying tenants
B. underlying properties
C. management company
Correct Answer: A

The lower the credit quality of the tenants, the higher the credit risk of the portfolio.

User Contributed Comments 2

User Comment
thebkr777 Can anyone explain?
FRAbyFRA Think of credit quality in the context of a bond. If the bond issuer has low credit quality, it becomes more likely that coupon payments won't be made. The same applies to rent payments from commercial property tennants, which provide the "fixed income" portion of the property's return.
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