Most analysts think that the required rate of return used in a DCF model for REITs and REOCs should be ______ the average stock in the broader market.

A. higher than.
B. the same as.
C. lower than.

Correct Answer: C

Due to the characteristics of commercial real estate and the REIT structure, most of a REIT's cash flow is reliable and may be predicted with a relatively higher level of confidence than many other industries.