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Descriptions of net operating income

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1. Which of the following descriptions of net operating income (NOI) is correct?

a. Net operating income is a pretax free cash flow concept.

b. NOI is used when applying the comparative sales approach.

c. NOI is a measure of the cost to construct the existing property

d. NOI is a measure of the cost to sell the existing property

2. The difference between an equity real estate investment trust (REIT) and a mortgage REIT is an equity REIT:

Pays cash for its properties, while a mortgage REIT uses mortgage financing to acquire its properties.

Is not subject to double taxation because it invests in real estate equity, while a mortgage REIT is subject to double taxation because it does not invest in real estate equity.

Invests in equity interests in real estate properties, while a mortgage REIT invests in mortgages that are used to finance the purchase of real estateproperties.

Invests in debt interests in real estate propertiess, while a mortgage REIT invests in equity investments that are used to finance the purchase of real estateproperties.

Reference no: EM131843009

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