FC 81236

Document Type
Test Prep
Book Title
Real Estate Finance & Investments (Real Estate Finance and Investments) 14th Edition
Jeffrey Fisher, William Brueggeman
Most real estate loans have a definite term to maturity, stated in years. The majority of
home loans will typically have a term to maturity between:
A. 1-5 years
B. 5-7 years
C. 7-15 years
D. 15-30 years
A tool used by real estate analysts to relate a consumer's activities, interests, opinions,
and values to a consumer's demographics is referred to as:
A. geographical information systems (GIS)
B. psychographics
C. survey research
D. census mapping
Property rights can be dismantled into lesser bundles, referred to as interests, which can
then be held by different individuals. Interests in real property that include possessions
are referred to as:
A. fixtures
B. townships
C. licenses
D. estates
Suppose you are interested in taking a mortgage loan for $250,000 in order to purchase
your principal residence. Your lender has suggested that you might be interested in
taking an FHA loan. In order to do so, you must pay an additional up-front mortgage
premium (UFMIP) of 1.0% of the mortgage balance. If the interest rate on the
fully-amortizing mortgage loan is 5% and the term is 30 years, what is your monthly
mortgage payment assuming the UFMIP is financed?
A. $1,342.05
B. $1,355.47
C. $1,498.88
D. $2,500
When a buyer acquires a property having an existing mortgage loan, a decision must be
made as to whether or not the subsequent owner of the property can preserve the loan.
If the buyer does not add his or her signature to the note, the buyer does not take on any
personal liability. In this case, the buyer is said to:
A. assume the old loan
B. purchase the property subject to the existing loan
C. obtain the property through the use of a contract for deed.
D. foreclose on the property
A recent trend in commercial leases is for tenants to negotiate a cap on the amount of
certain operating expenses they are required to reimburse the landlord. Such caps are
usually negotiated on operating expenses thought to be at least partially controllable by
the owner. Which of the following would typically be considered an operating expense
controllable by the owner?
A. General maintenance
B. Property taxes
C. Insurance payments
D. Utility expenses
A contract for sale of real estate usually calls for the seller to provide evidence of title
as a requisite to completing the sale. Today, the predominant medium through which a
seller meets this requirement is by providing:
A. only a title abstract.
B. only an attorney's opinion of title.
C. only a title insurance commitment.
D. only a seller's disclosure
One of the main differences between residential mortgage loans and permanent
financing of commercial real estate lies in the allocation of liability in the case of
default. In commercial real estate, a "bankruptcy remote" special-purpose entity is
created that shields the actual borrower from personal liability. When a lender cannot
lay claim to the personal assets of the defaulted borrower, this type of loan is commonly
referred to as a:
A. nonrecourse loan
B. mini-perm loan
C. partially amortizing loan
D. interest-only loan
Despite many innovations in the lending process that made mortgage loans more
accessible and affordable to the general public, many potential borrowers faced
considerable barriers in qualifying for a loan and making a down payment. Which of
the following types of loans was designed for a borrower with weak credit, those who
seek 100 percent financing, or who cannot document their income?
A. Conventional prime home loan
B. Affordable housing loan
C. Subprime mortgage loan
D. Bridge loan
Most Adjustable Rate Mortgage (ARM) loans have been marketed with a temporarily
reduced interest rate commonly referred to as a:
A. rate cap
B. teaser rate
C. payment cap
D. prepayment rate
Given the following information, calculate the depreciation allowance for year 1.
Depreciable Basis: $200,000, Declining Balance Depreciation: 175%, Cost Recovery
Period: 27 years.
A. $3,704
B. $6,481
C. $7,407
D. $12,963
The choice of ownership form for pooled equity investments can also depend on the
desire to avoid personal liability. Which of the following ownership structures suffers
from the major disadvantage of unlimited liability for all investors?
A. C Corporation
B. Subchapter S Corporation
C. General Partnership
D. Limited Partnership
While predicting real estate cycles is difficult, a key indicator used to evaluate where a
property is within the cycle is:
A. the level of household income
B. the form of land use
C. the size of the property
D. the number of building permits issued
Because a city's output capacities change slowly over time, it is important to understand
the supply side (long-run) factors affecting urban growth. Which of the following would
NOT be considered a supply-side factor that impacts a city's economic growth?
A. Nature of the available labor force
B. Quality of life within a community
C. Cooperation of local leadership and government
D. City's export activity
Suppose you have obtained a 6%, 30 year fully-amortizing FHA mortgage loan of
$152,625 to finance the purchase of your primary residence. In so doing, you must pay
an additional mortgage insurance premium (MIP) of 1.10%. If the first-year average
loan balance is $151,775.25, determine the first-year monthly insurance premium
A. $139.13
B. $1,025.69
C. $1,669.53
D. $1,678.88
Up until the market for these instruments collapsed in 2008, which of the following was
the fastest-growing source of long-term commercial mortgage funds from 2002-2007?
A. Real estate investment trusts (REITs)
B. Commercial mortgage backed securities (CMBS)
C. Construction loans
D. Residential mortgage backed securities (MBS)
If we desire to classify land by its use, land that does not include any improvements to
the land would be categorized as:
A. "Raw" land
B. Building site
C. Developed land
D. Property infrastructure
To put into perspective the amount of residential mortgage debt outstanding, it is useful
to compare this market to other prominent sources of available debt. Listing the issuer
with the largest amount of debt outstanding first, which of the following choices best
depicts the relative rank ordering amongst the major sources of outstanding debt in the
U.S. as of the end of 2011?
A. Residential mortgage debt, marketable U.S. government bonds, corporate bonds,
consumer debt
B. Marketable U.S. government bonds, residential mortgage debt, corporate bonds,
consumer debt
C. Corporate bonds, marketable U.S. government bonds, residential mortgage debt,
consumer debt
D. Consumer debt, residential mortgage debt, marketable U.S. government bonds,
corporate bonds
Contracts for sale may contain sections that cause implementation of the contract to
depend on the successful completion of some prior action such as the buyer's ability to
obtain financing on specified terms. This type of contract is commonly referred to as
A. contract assignment
B. equitable title
C. contract with contingencies
D. uniform settlement statement
Jonathan recently sold his home and was able to take home $423,000 after paying the
real estate broker's commission of 6%. If the buyer was ultimately found through a
buyer broker, the dollar commission will need to be split between the listing broker and
buyer broker. If the buyer broker is entitled to 40% of the commission, what is her share
of the commission rounded to the nearest dollar?
A. $10,800
B. $13,500
C. $16,200
D. $27,000
In accordance with RESPA, whenever a buyer obtains a new first mortgage loan from a
chartered or insured lender, when the loan is insured by the FHA or guaranteed by the
VA, or when the loan will be sold to one of the federally related secondary mortgage
market agencies, a good-faith estimate of the settlement costs must be provided by the
lender within:
A. 3 business days
B. 5 business days
C. 30 calendar days
D. 90 calendar days
The majority of residential units in the U.S. are contained in multifamily structures, or
apartment buildings that contain five or more housing units. Which of the following
multifamily structures will range in height from four to nine stories and are typically
found in both cities and suburbs?
A. High-rise apartment buildings
B. Midrise apartment buildings
C. Garden apartments
D. Condominiums
In a mortgage loan, the borrower always creates two documents: a note and a mortgage.
Which of the following pieces of information is provided in the mortgage?
A. How the interest rate is to be computed.
B. Whether the borrower has the right to prepay the principal during the term of the
loan, and any prepayment penalties that would be incurred as a result.
C. Whether the borrower is released from liability for fulfillment of the contract.
D. An unambiguous description of the property that is being pledged as collateral for
the loan.
Traditional home mortgage underwriting is said to rest on three elements, the "three
C's." The housing expense ratio is one tool that lenders will use to address concerns
associated with which of the "three C's?"
A. Collateral
B. Creditworthiness
C. Capacity
D. Capability
A comparable property sold 15 months ago for $105,000. If the appropriate adjustment
for market conditions is 0.25% per month (without compounding), what would be the
adjusted price of the comparable property?
A. $105,262.50
B. $105,393.80
C. $108,937.50
D. $144,375
In most small to medium private real estate deals, syndicators play important roles
within the origination, operation, and completion phases of a real estate syndicate's life.
All of the following are responsibilities of the syndicator in the operation phase of a
syndicate's life EXCEPT:
A. Manage the syndication
B. Manage properties
C. Raise additional investment capital if required
D. Prepare the properties for sale
The expertise of several types of engineers must be coordinated by the architect in
bringing together the final structure design. Which of the following types of engineers
is responsible for specifications to achieve safety and stability for a structure's
A. Soils engineer
B. Structural engineer
C. Mechanical engineer
D. Civil engineer
While it is often sufficient to rely on informal methods of estimating the market value
of real estate assets, the complexity and large dollar value of many real estate decisions
dictate that formal estimates based on methodical collection and analysis of relevant
market data should be utilized. The unbiased written estimate of the market value of a
property is
commonly referred to as a(n):
A. arm's length transaction
B. appraisal
C. property adjustment
D. reconciliation
If the per share stock price of a REIT is greater than its per share net asset value (NAV),
the REIT is said to be selling at:
A. par value
B. a discount
C. a premium
D. an auction
When a buyer signs an offer to purchase a property, the broker receives a monetary
amount from the purchaser of 5 or 10 percent of the purchase price. This deposit is
commonly referred to as the:
A. commission
B. earnest money
C. closing cost
D. title insurance premium
Suppose an investor is interested in purchasing the following income producing
property at a current market price of $450,000. The prospective buyer has estimated the
expected cash flows over the next four years to be as follows: Year 1 = $40,000, Year 2
$45,000, Year 3 = $50,000, Year 4 = $55,000. Assuming that the required rate of return
is 12% and the estimated proceeds from selling the property at the end of year four is
$500,000, what is the NPV of the project?
A. $8,829.96
B. $9,889.56
C. $428,113.65
D. $459,889.56
Traditional zoning regulations are criticized for often being too rigid in forcing uniform
types of development. One proposed solution to this issue allows traditional zoning
requirements to vary in exchange for an enhancement to the community, such as the
construction of a park. This is more commonly referred to as a:
A. Planned unit development
B. Performance standard
C. Impact fee
D. Growth restriction
In the Elysian Forest example, the planned unit development was destined to be an
unsuccessful venture from its inception because:
A. There was a comparable project in the community that was successful.
B. The site and location of the project was atypical of the area as there were significant
disadvantages in terms of location and visual appeal.
C. The target market was a nontraditional segment that relied heavily on a small portion
of the local University City population.
D. University City was a big, high density city that could not support such
Assume that a borrower has a choice between two comparable fixed-rate mortgage
loans with the same interest rate, but different mortgage terms, one being a 30-year
mortgage and the other a 15-year mortgage. Under financially unconstrained
circumstances, which of the following statements best describes the borrower's
A. The borrower would prefer the 30-year mortgage.
B. The borrower would prefer the 15-year mortgage.
C. The borrower would be indifferent between the two mortgages.
D. The borrower is unable to compare mortgage loans of two different maturities.

Trusted by Thousands of

Here are what students say about us.

Copyright ©2022 All rights reserved. | CoursePaper is not sponsored or endorsed by any college or university.