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Basic Question 3 of 4
Which should be the discount rate for a developed economy government tenant that agrees to pay fixed nominal rental income in a commercial lease?
θit,s: inflation premium
πit,s: uncertainty related to future inflation
ϒit,s: credit risk premium
Κit,s: commercial real estate risk premium
Φit,s: commercial real estate liquidity premium
B. 1 + lt,s + θit,s + πit,s + Κit,s + Φit,s
C. 1 + lt,s + θit,s + πit,s
lt,s: real interest rate
θit,s: inflation premium
πit,s: uncertainty related to future inflation
ϒit,s: credit risk premium
Κit,s: commercial real estate risk premium
Φit,s: commercial real estate liquidity premium
A. 1 + lt,s + θit,s + πit,s + ϒit,s + Κit,s + Φit,s
B. 1 + lt,s + θit,s + πit,s + Κit,s + Φit,s
C. 1 + lt,s + θit,s + πit,s
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Your review questions and global ranking system were so helpful.
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Learning Outcome Statements
describe the economic factors affecting investment in commercial real estate.
CFA® 2025 Level II Curriculum, Volume 6, Module 37.