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Florida Real Estate Exam

Category - Florida

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Using borrowed funds when available at rates that are below the equity yield of an investment property:

Is illegal
Increases the cash flow
Enhances the equity yield
Decreases the equity yield

Explanation

Answer C - This is an example of leverage. Borrowing money at 6% interest and earning 8% interest on the investment enhances the equity yield.

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Florida Real Estate Exam

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