Property Valuation
What is a capitalization rate and what does a higher cap rate indicate about market risk in Nevada?
AHigher cap rates indicate lower risk and higher demand
BHigher cap rates generally indicate higher perceived risk, lower demand, or properties in secondary/tertiary Nevada markets✓ Correct
CCap rates have no relationship to risk
DHigher cap rates always indicate better investment quality
Explanation
Cap rates reflect the relationship between income and value. Higher cap rates typically indicate higher perceived risk, lower demand, or property in less desirable locations. Premium Nevada markets like Las Vegas Strip commercial properties command lower cap rates due to high investor demand.
Related Nevada Property Valuation Questions
- What is 'market conditions adjustment' in Nevada appraisal and why is it important?
- In Nevada, which principle of value states that the value of a property is affected by the values of surrounding properties?
- The principle of substitution in Nevada appraisal theory states that:
- What is a narrative appraisal report in Nevada and when is it used?
- In Nevada real estate, 'market value' is best defined as:
- What is an appraisal review in Nevada real estate?
- What is a drive-by appraisal in Nevada mortgage lending?
- What is the land residual technique in Nevada commercial appraisal?
Practice More Nevada Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Nevada Quiz →