TAMU FINC 475 - Final Exam Study Guide (10 pages)

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Final Exam Study Guide

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Final Exam Study Guide


Includes new chapters, REIT presentation notes, and DCF practice problems

Study Guide
Texas A&M University
Finc 475 - Real Estate Inv Anlys
Real Estate Inv Anlys Documents

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FINC 475 1st Edition Final Exam Study Guide Lectures Ch 15 19 21 and 23 REIT Notes DCF NOTE This exam is cumulative See previous study guides for a review of previous material This study guide includes the new chapters REIT presentation information and DCF practice problems New Chapters 15 19 21 23 Chapter 15 What are the four categories of risk 1 Business Risk making inappropriate business decisions or misjudging consequences of ones actions 2 Financial Risk choice of financial arrangements 3 People Risk from dependency on others 4 Political Risk from dependency on government What are a few ways to manage risk Insurable Risk safe deals diversification research experience shift risk to tenant hedging What are the steps in how to identify risk Identify Assess Probability Determine Response Plan Set Up Systems to Manage Monitor Why is it important to identify risk Improve Decision Making Planning and Prioritization Allocate Capital and Resource more Efficiently Anticipate what might go Wrong Reduces Firefighting Improve Probability of Success What are the traditional tools for risk assessment Payback Period Risk Adjusted Discount Rate most common use risk premium each project has its own risk characteristic Partitioning of Cash Flows NPV of each piece to see which is most important Sensitivity Analysis Extension of Partitioning in that we add the impact of changing variable What are the contemporary tools for risk assessment Rank the Risks according to probability and outcome Work Breakdown Structure is a timeline of the project Chapter 19 What are the categories of constraints for investments Physical engineering limits soil tolerances size limits amount of space neighborhood amenities transportation services etc Legal zoning court rulings public pressure Valuation market considerations What is the difference between feasibility and valuation Both utilize the same data however valuation is solely asset worth aka already assumes reasonable feasibility and feasibility

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