The Cap Rate Is an Important Metric That Investors Use

Multiple Choice

The cap rate is an important metric that investors use to analyze the state of commercial real estate markets. When interpreting cap rate movements, an increase in cap rates over time would indicate that:

A) The discount rate used in TVM (time value of money) calculations has increased
B) The discount rate used in TVM (time value of money) calculations has decreased
C) Property values have increased
D) Property values have decreased