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Cap rates will be high when: Market demand is high Property is old Interest rates are...

Cap rates will be high when:

Market demand is high

Property is old

Interest rates are low

Property expects fast income growth

None of above
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Answer #1

Ans:- Capitalization rate or CAP rate is given by Net Operating Income / Current Market Value of the Property or Asset.

  CAP rate will be High when the Current Market Value of the Property is low and generally the Market Value of the Property will be low when the Property is old.

If the Current Market Value of the Property is high, that means demand is high and in that case, the Market Value of Property will be high whereas the CAP rate will be low.

Therefore the CAP rate is high when Property is old. option (b) is the right answer.

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