Capitalization rates will differ from yield rates when the income is expected to __________ over time.

Question

Quizplus · Accepted Answer

Capitalization rates are based on the current income of a property, while yield rates take into account the expected income growth over time. If the income is expected to decrease over time, the yield rate will be lower than the current capitalization rate. Therefore, the best choice is B, which indicates that the income is expected to decrease over time. Choice A is incorrect because if the income stays the same, the capitalization rate will be the same as the yield rate. Choice C is unrelated and does not make sense in this context.

Capitalization Rates Will Differ from Yield Rates When the Income