CFA Practice Question

There are 195 practice questions for this study session.

CFA Practice Question

Which REIT valuation approach ignores the management's ability to create or destroy value?
A. NAV approach.
B. Relative value approach.
C. Discount cash flow approach.
Explanation: NAV implicitly treats a company as an individual asset or static pool of assets. It does not consider how much value a management team can add to current NAV.

User Contributed Comments 2

User Comment
6469167 can someone elaborate?
dimitris13 the NAV is a method to value private equity investments in real estate that ignores excess liquidity or management skills incorporated in the valuation of REITS. The NAV is essentially like the sum of the parts method
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