Real Estate Principles: A Value Approach (Mchill-hill/Irwin Series in Finance, Insurance, and Real Estate) 5th Edition

CHAPTER 1 The Nature of Real Estate and Real Estate Markets Test Problems 1. A market where tenants negotiate rent and other terms with property owners or their managers is referred to as a: b. User market b. User market b. User market 2. The market in which required rates of return on available investment opportunities are

CHAPTER 10 Residential Mortgage Types and Borrower Decisions Test Problems 1. Private mortgage insurance (PMI) is usually required on _____ loans with loan-to-value ratios greater than _____ percent. d. Home, 80 percent. d. Home, 80 percent. d. Home, 80 percent. 2. The type of mortgage loan that best fits the asset-liability mix of most depository institutios is

CHAPTER 11 Sources of Funds for Residential Mortgages Test Problems 1. Mortgage banking companies: a. Collect monthly payments and forward them to the mortgage investor. a. Collect monthly payments and forward them to the mortgage investor. a. Collect monthly payments and forward them to the mortgage investor. 2. In the last 20 years, the

CHAPTER 12 REAL ESTATE BROKERAGE AND LISTING CONTRACTS Test Problems 1. A down payment deposit from a potential buyer must be held in: c. The brokers escrow trust account. c. The brokers escrow trust account. c. The brokers escrow trust account. 2. One of the most effective ways that salespersons or brokers can distinguish themselves as a

Chapter 13 Contracts for Sale and Closing Test Problems 1. If a buyer defaults on a contract to purchase real property, which of the following is not a remedy the seller can pursue? c. Sue for assignment. c. Sue for assignment. c. Sue for assignment. 2. When contracts for the sale of real property are placed with

CHAPTER 14 The Effects of Time and Risk on Value Test Problems 1. How much will a $50 deposit made today be worth in 20 years if interest is compounded annually at a rate of 10 percent? d. $336.37 d. $336.37 d. $336.37 2. How much would you pay today for the right to receive $80 at

CHAPTER 15 Mortgage Calculations and Decisions Test Problems 1. The most common adjustment interval on an adjustable rate mortgage (ARM) once the interest begins to change has been: b. One year. b. One year. b. One year. 2. A characteristic of a partially amortized loan is: b. A balloon payment is required at the end of the loan

CHAPTER 16 Commercial Mortgage Types and Decisions Test Problems 1. Due-on-sale clauses are included in commercial mortgages primarily to protect lenders from: b. Default risk. b. Default risk. b. Default risk. 2. Consider a 30-year, 7 percent, fixed rate, fully amortizing mortgage with a yield maintenance provision. Relative to this mortgage, a 10-year balloon mortgage with the

CHAPTER 17 Sources of Commercial Debt and Equity Capital Test Problems 1. Double taxation of the income produced by the underlying real estate is most likely to occur if the commercial properties are held in the form of a(n): c. C Corporation c. C Corporation c. C Corporation 2. With regard to double taxation, distributions, and the

CHAPTER 18 Investment Decisions: Ratios Test Problems 1. Income multipliers: a. Are useful as a preliminary analysis tool to weed out obviously unacceptable investment opportunities. investment opportunities. investment opportunities. 2. The overall capitalization rate calculated on a potential acquisition: a. Is the reciprocal of the net income multiplier. a. Is the reciprocal of the net income multiplier. a. Is the

CHAPTER 19 Investment Decisions: NPV and IRR Test Questions 1. A real estate investment is available at an initial cash outlay of $10,000, and is expected to yield cash flows of $3,343.81 per year for five years. The internal rate of return (IRR) is approximately: b. 20 percent. b. 20 percent. b. 20 percent. 2. The net

CHAPTER 2 Legal Foundations to Value Test Problems 1. Which of the following is not a form of property right? d. License d. License d. License 2. Which of these easements is most likely to be an easement in gross? d. Power line easement d. Power line easement d. Power line easement 3. Rules used by courts

CHAPTER 20 Income Taxation and Value Test Problems 1. Taxable income from the rental of actively managed depreciable real estate is classified as: b. Passive income. b. Passive income. b. Passive income. 2. Under current federal income tax law, what is the shortest cost recovery period available to investors purchasing commercial rental property? d. 39 years. d. 39

CHAPTER 21 Enhancing Value through Ongoing Management Test Problems 1. The Institute of Real Estate Management (IREM) awards which of the following designations? b. CPM. b. CPM. b. CPM. 2. A contractual relationship in which an individual must act in the best interests of a principal when dealing with a third party is termed: a. An agency relationship. a. An

CHAPTER 3 Conveying Real Property Interests Test Questions 1. Which of these is not a requirement of a valid deed? b. Competent grantee. b. Competent grantee. b. Competent grantee. 2. The interest being conveyed by a deed is specified in the: b. Habendum clause b. Habendum clause b. Habendum clause 3. The highest quality form of deed is the: a. General warrantee

Chapter 4 Government Controls and Real Estate Markets Test Problems Answer the following multiple choice questions. 1. Zoning is an exercise of which type of general limitation on property rights? c. Police power. c. Police power. c. Police power. 2. A comprehensive plan usually deals with which of the following elements? e. All of the above. e.

Chapter 5 Market Determinants of Value Test Problems 1. The gravity that draws economic activity into clusters is: c. Demand for access or proximity. c. Demand for access or proximity. c. Demand for access or proximity. 2. Spatial or distance relationships that are important to a land use are called its: a. Linkages. a. Linkages. a. Linkages. 3. Cities have

CHAPTER 6 Forecasting Ownership Benefit and Value: Market Research Test Problems 1. Factors that affect housing market segmentation include all except: d. Household unemployment status. d. Household unemployment status. d. Household unemployment status. 2. The process of creating a market-defining story includes all of these questions except: d. What is the price? d. What is the price? d. What is

CHAPTER 7 Valuation Using the Sales Comparison and Cost Approaches Test Problems 1. The final price for each comparable property reached after all adjustments have been made is termed the: b. Final adjusted sale price. b. Final adjusted sale price. b. Final adjusted sale price. 2. Which of the following is not included in accrued depreciation when

CHAPTER 8 Valuation Using the Income Approach Test Problems 1. Which of the following expenses is not an operating expense? d. Mortgage payment. 2. An overall capitalization rate (Ro) is divided into which type of income or cash flow to obtain an indicated market value? a. Net operating income (NOI). 3. Which of the following types of

Chapter 9 Real Estate Finance: The Laws and Contracts Test Problems 1. The element of an adjustable interest rate that is the moving part is the: b. Index b. Index b. Index 2. Which of these aspects of a mortgage loan will be addressed in the note rather than in the mortgage? a. Prepayment penalty a. Prepayment penalty a. Prepayment