Yields

Question 1

All risks yield

Answer 1

A property’s expected net income taking account of its risks as well

Question 2

Running Yield

Answer 2

A yield at one moment in time

Question 3

Gross yield

Answer 3

Rent divided by purchase price/value (not accounting for purchasers costs)

Question 4

Net Yield

Answer 4

Resulting yield adjusted for purchasers costs

Question 5

Initial Yield

Answer 5

Reflects return on current passing rent

Question 6

Equivalent Yield

Answer 6

Combines initial and reversionary yield

It reflects both current and future income

Question 7

True Yield

Answer 7

Assumes rent is paid in advance (not in arrears)

Question 8

Nominal Yield

Answer 8

Initial yield assuming rent is paid in arrears

Question 9

Reversionary Yield

Answer 9

The yield an investment is expected to make once the property is let at MR

MR divided by current price on an investment let at a rent below MR

Question 10

What is a yield?

Answer 10

Annual return generated by a property (as a %)

Question 11

Annuity v Perpetuity

Answer 11

Annuity - fixed payments within specififed timeframe

Perpetuity - payments that continue indefinitely

Question 12

Advance v arrears

Answer 12

Advance = eg rent paid at the bgeinning of the month

Arrears = eg missed mortgage payment, or missed rental payment and it comes in at the end of the month say

Question 13

Internal Rate of Return

Answer 13

Annual rate of growth an investment is expected to generate

Question 14

Net Present Value

Answer 14

Present Value of future cash flows – initial investment