The Effects of Risk. As we know, the cap rate relation is given by: R = NOI/V This relation is also the total return relation when an investor buys an income property for cash (V=AP) and holds it in perpetuity: y = NOI/AP
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s2(R) = (1/V2) s2(NOI) = (1/AP2) s2(NOI) = s2(y)
S2(BTCF) = (1/V2) s2(joint) < (1/AP2) s2(joint) = s2(y)
s2(BTCF) = (1/V2) s2(joint) < (1/AP2) s2(joint) = s2(y)