ASC ASC Debt and Financing Analysis 1 — Questions and Answers
Question 1: What does DSCR stand for in ARGUS debt modeling?
- Debt Service Coverage Ratio (Correct answer)
- Debt Structure Calculation Report
- Default Scenario Cost Rate
- Deferred Security Cash Reserve
Correct answer: Debt Service Coverage Ratio
DSCR stands for Debt Service Coverage Ratio, which measures a property's ability to cover its debt obligations from NOI.
Question 2: In ARGUS, which metric represents the maximum loan amount as a percentage of property value?
- NOI
- LTV (Correct answer)
- IRR
- DSC
Correct answer: LTV
LTV (Loan-to-Value) ratio represents the maximum loan amount as a percentage of the property's appraised value.
Question 3: When modeling a floating rate loan in ARGUS, which input is used to set the base interest rate index?
- Cap rate
- Discount rate
- Index rate (Correct answer)
- Spread rate
Correct answer: Index rate
The index rate (such as SOFR or Treasury) serves as the base benchmark for floating rate loans in ARGUS, to which a spread is added.
Question 4: In ARGUS, what happens to the loan balance when you model an interest-only loan period?
- It decreases at an accelerated rate
- It remains constant with no principal reduction (Correct answer)
- It increases due to negative amortization
- It is automatically refinanced
Correct answer: It remains constant with no principal reduction
During an interest-only period, borrowers pay only interest so the principal balance remains unchanged throughout that phase.
Question 5: Which ARGUS feature allows you to model multiple loan tranches on a single property?
- Waterfall module
- Debt tab with multiple financing layers (Correct answer)
- IRR calculator
- Lease rollover schedule
Correct answer: Debt tab with multiple financing layers
ARGUS allows stacking multiple debt layers (senior, mezzanine, etc.) through the Debt tab's financing structure inputs.
Question 6: What is a balloon payment in the context of ARGUS loan modeling?
- An additional monthly interest charge
- The lump sum principal due at loan maturity (Correct answer)
- A prepayment penalty fee
- An origination fee added to the loan balance
Correct answer: The lump sum principal due at loan maturity
A balloon payment is the remaining principal balance due as a lump sum at the end of the loan term.
ASC ASC Debt and Financing Analysis 1
What does DSCR stand for in ARGUS debt modeling?