Real Estate Analysis Exam Review
Course Introduction
Real Estate Analysis provides students with the foundational concepts, tools, and quantitative techniques necessary to assess real estate investments and markets. The course covers property valuation methods, market dynamics, risk assessment, and the financial analysis of real estate assets. Emphasis is placed on interpreting market data, understanding factors influencing supply and demand, and applying analytical frameworks to residential, commercial, and industrial properties. Students are also introduced to the legal, regulatory, and ethical considerations shaping real estate decisions, preparing them to make informed analyses in professional practice or further study.
Recommended Textbook
Real Estate Finance Theory and Practice 6th Edition by
Available Study Resources on Quizplus
22 Chapters
473 Verified Questions
473 Flashcards
Source URL: https://quizplus.com/study-set/3509
Terrence M. Clauretie
Page 2
Chapter 1: Finance and Real Estate
Available Study Resources on Quizplus for this Chatper
13 Verified Questions
13 Flashcards
Source URL: https://quizplus.com/quiz/69725
Sample Questions
Q1) Money markets:
A) deal strictly in cash or checks
B) deal in short-term (matures in one year or less)securities
C) deal in short-term (matures in eighteen months or less)securities
D) help corporations finance their assets with long-term bonds
Answer: B
Q2) The following is an accurate statement:
A) the fields of finance and economics are unrelated for the most part
B) finance is a segment of the more general field of economics
C) finance focuses on profits,whereas economics focuses on cash flows
D) b and c
Answer: B
Q3) Risk:
A) is the same as risk-return tradeoff
B) is the possibility that the actual result will differ from the expected outcome
C) states that investors require additional expected returns for taking on additional risk
D) doesn't need to be considered when analyzing a potential investment
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
3
Chapter 2: Money Credit and the Determination of Interest
Rates
Available Study Resources on Quizplus for this Chatper
20 Verified Questions
20 Flashcards
Source URL: https://quizplus.com/quiz/69724
Sample Questions
Q1) The Equation of Exchange (Irving Fisher)is:
A) MV = PT
B) MP = VT
C) MT = PV
D) none of the above
Answer: A
Q2) Non-callable bonds:
A) have a callability risk attached to them
B) are less desirable than callable bonds
C) can be called prior to maturity if holders are given a 120-day notice
D) will have a lower yield than identical callable bonds
Answer: D
Q3) The line of causation: of money> inflation> interest rate mechanism is:
A) money,economy,inflation,inflationary expectation,credit markets,interest rates
B) interest rate,credit markets,inflationary expectations,inflation,economy,money
C) inflationary expectations,inflation,economy,interest rate
D) credit market,inflationary expectations,interest rate
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Finance Theory and Real Estate
Available Study Resources on Quizplus for this Chatper
24 Verified Questions
24 Flashcards
Source URL: https://quizplus.com/quiz/69723
Sample Questions
Q1) Cash flows associated with servicing rights:
A) have little risk since the servicing fees are related to all payments
B) are not affected by market rates
C) have value and can be sold
D) are composed of the fees less the discount rate
Answer: C
Q2) Monitoring costs do NOT include:
A) auditing the books
B) inspecting the property
C) paying property taxes
D) checking on the operations of the manager
Answer: C
Q3) The discounted cash flow (DCF)model of valuation does NOT contain:
A) present value
B) internal rate of return
C) the discount rate
D) amount of the cash flows
Answer: B
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: The Early History of Residential Finance and
Creation of the Fixed Rate Mortgage
Available Study Resources on Quizplus for this Chatper
31 Verified Questions
31 Flashcards
Source URL: https://quizplus.com/quiz/69722
Sample Questions
Q1) The mortgage constant (MC)factor calculates the payment per dollar borrowed. The numerator of the MC factor is (i)(1 + i)<sup>n</sup>.The denominator of the MC factor is:
A) (1 + i)<sup>n</sup>
B) (1 + i)<sup>n</sup> - 1
C) i<sup>n</sup>
D) i
E) there is no denominator
Q2) A lender offers you a fixed-rate mortgage for $145,000 at 6.25% for 30 years, monthly payments,with 0.75 discount points.If you repay the loan balance at the end of year four,what is the effective cost of the loan?
A) 6.32%
B) 6.47%
C) 7.00%
D) 6.25%
E) none of the above
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Modern Residential Finance
Available Study Resources on Quizplus for this Chatper
4 Verified Questions
4 Flashcards
Source URL: https://quizplus.com/quiz/69721
Sample Questions
Q1) Assumable loans and carry backs:
A) have totally replaced FHA and VA financing
B) are examples of what is termed creative financing
C) are short-term loans with balloon payments
D) are two forms of FHA financing
Q2) A maturity mismatch occurs when:
A) over one half of all mortgage debt is held by depository institutions
B) mortgage loan interest rates are high
C) a financial institution has originated more conventional loans than government insured loans
D) there is a large difference in the maturity of a financial institutions assets and liabilities
Q3) Negative amortization refers to the fact that:
A) the balance of a loan grows larger rather than smaller
B) the amount of interest on a loan becomes larger rather than smaller
C) the reduction in the value of a property falls below the loan amount
D) none of the above
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Alternative Mortgage Instruments
Available Study Resources on Quizplus for this Chatper
36 Verified Questions
36 Flashcards
Source URL: https://quizplus.com/quiz/69720
Sample Questions
Q1) The initial monthly payment on an adjustable rate mortgage with a balance of $100,000,an interest rate of 8.5% annually and a term of 30 years will be:
A) $3,711.78
B) $733.76
C) $768.91
D) $3,688.83
Q2) Your grandfather takes a reverse annuity mortgage on his house for $135,000 at 7.00% for five years.His payments are an equal annual annuity of $21,939.If he decides to repay the loan at the end of year three,what amount is owed?
A) $54,247
B) $59,529
C) $75,469
D) $104,678
E) $107,507
Q3) The longer the time between rate adjustments on an adjustable rate mortgage:
A) the less risk assumed by the lender
B) the less probability of prepayment
C) the more risk assumed by the lender
D) the greater the fluctuation in the rate on the loan
To view all questions and flashcards with answers, click on the resource link above.
Page 8
Chapter 7: Financing and Property Values
Available Study Resources on Quizplus for this Chatper
3 Verified Questions
3 Flashcards
Source URL: https://quizplus.com/quiz/69719
Sample Questions
Q1) The term "cash equivalent" value refers to:
A) the value of a residential property while it is listed
B) the amount of discount points charged by a lender
C) the value of a property if sold for all cash
D) the cash equivalency of the mortgage on a property
Q2) Mortgage Revenue Bonds,a class of bonds called municipals,are issued by state and local governments and:
A) allow the government to purchase property for government use
B) provide an interest rate at a higher rate than corporate bonds
C) provide interest that is free of federal taxation
D) provide interest that is free from capital gains taxation
Q3) The term "carryback financing" refers to:
A) a motivated seller who takes back a note at a low rate in order to sell the property
B) a situation where the lender takes the property back after a default on the loan
C) an assumable loan in which a lender waives the discount points in order to complete the loan transaction
D) an assumable FHA loan
To view all questions and flashcards with answers, click on the resource link above.
9
Chapter 8: Federal Housing Policies: Part 1
Available Study Resources on Quizplus for this Chatper
19 Verified Questions
19 Flashcards
Source URL: https://quizplus.com/quiz/69718
Sample Questions
Q1) What conclusions can you draw about the influence of housing inflation on the annual cost of housing?
A) Housing inflation increases the cost of housing
B) Housing inflation increases the cost of housing by a very small amount
C) Housing inflation reduces the cost of housing
D) Housing inflation has almost no effect on the cost of housing
Q2) Before the integration of the mortgage market into the larger capital market,rates on residential mortgages relative to bonds were:
A) generally lower
B) always lower
C) relatively higher
D) about the same
Q3) A loan in which the lender receives a share of the increase in value of the property in return for a reduction in the initial rate of interest,is called a(n):
A) adjustable rate mortgage
B) graduated payment mortgage
C) buy down mortgage
D) shared appreciation mortgage
To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: Federal Housing Policies: Part 2
Available Study Resources on Quizplus for this Chatper
12 Verified Questions
12 Flashcards
Source URL: https://quizplus.com/quiz/69717
Sample Questions
Q1) If a broker makes a statement that certain minority groups are moving into a neighborhood,and that property owners should sell quickly at a reduced price to avoid further depreciation,they are using an illegal practice known as:
A) blacklisting
B) redlining
C) blockbusting
D) FHAing
Q2) Which of the following are exempt from the provisions (except for racial discrimination)of the Fair Housing Act of 1968?
A) an owner-occupant who does not employ a broker
B) religious organizations
C) private clubs that do not operate commercially for a profit
D) all of the above
E) none of the above
Q3) Which of the following statements is incorrect in relation to the ECOA?
A) non-discriminatory firms will attain a competitive advantage
B) lenders are engaged in little discrimination
C) the ECOA has had a significant impact on making credit available
D) the ECOA is a valuable statement about principles of fair lending practices
To view all questions and flashcards with answers, click on the resource link above.
Page 11
Chapter 10: The Secondary Mortgage Market
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/69716
Sample Questions
Q1) 10-24.In 1938 Congress established as a subsidiary of the Reconstruction Finance Corporation the:
A) Government National Mortgage Association
B) Federal National Mortgage Association
C) Federal Home Loan Mortgage Corporation
D) Housing and Home Finance Agency
Q2) 10-13.Rating agencies review the credit risk of the collateral of CMOs for all of the following except:
A) type of property
B) location of property
C) interest rates d loan-to-value ratio of property
Q3) 10-27.Prior to the secondary mortgage market it was difficult for thrifts to sell mortgages because:
A) their mortgage assets were not homogeneous
B) potential buyers were concerned with default risk
C) both a and b
D) none of the above
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Valuation of Mortgage Securities
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/69715
Sample Questions
Q1) 11-19.The CPR of passthroughs refers to:
A) coupon premium risk
B) coupon percentage rate
C) constant prepayment rate
D) cardio-pulmonary resuscitation
Q2) The cash flows of mortgage-backed bonds:
A) are designed to appear as traditional callable debt
B) promise periodic coupon payments
C) promise the return of the face value at maturity
D) b and c
E) a and c
Q3) One of the non-economic factors affecting the prepayment behavior of a mortgage pool is:
A) current market rates
B) pool rates
C) job relocation
D) all of the above are non-economic factors affecting prepayment behavior as outlined in this text
To view all questions and flashcards with answers, click on the resource link above.
13
Chapter 12: Controlling Default Risk Through Borrower
Available Study Resources on Quizplus for this Chatper
41 Verified Questions
41 Flashcards
Source URL: https://quizplus.com/quiz/69714
Sample Questions
Q1) 12-29."Significant compensating factors," after dual qualifying ratios have been computed in respect to gross income,include:
A) conservative attitude toward credit
B) at least 10% investment in the property
C) renting out use of the property
D) both a and b
Q2) 12-25.The following are NOT of prime importance to an appraiser of property:
A) uniform building code standards
B) square footage and number of bedrooms
C) condition of electrical,plumbing,heating,etc.
D) both a and c
Q3) 12-23.The most significant job classification relating to defaults conducted in a study by T.Gregory Morton was:
A) government employee
B) salesman
C) peace officer
D) teacher
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Loan Origination, Processing, and Closing
Available Study Resources on Quizplus for this Chatper
43 Verified Questions
43 Flashcards
Source URL: https://quizplus.com/quiz/69713
Sample Questions
Q1) Flood insurance is required for properties located in:
A) zone A
B) zone B
C) zone C
D) zone D
Q2) 13-27.The approach based on the idea that a buyer will not pay more for a property than the amount it would take to build it from scratch is:
A) the income approach
B) the cost approach
C) the market approach
D) the scratch approach
Q3) 13-33.A promissory note represents:
A) the borrower's promise to obtain a loan
B) the borrower's promise to repay a loan
C) a deed
D) the lender's promise to make a loan
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter
Available Study Resources on Quizplus for this Chatper
7 Verified Questions
7 Flashcards
Source URL: https://quizplus.com/quiz/69712
Sample Questions
Q1) An equitable right of redemption:
A) is allowed after foreclosure
B) allows a delinquent mortgagor to prevent foreclosure by paying delinquent interest and other costs
C) is the same as a statutory right of redemption
D) none of the above
Q2) A deficiency judgment is:
A) a judgment that allows the mortgagor to redeem the property prior to foreclosure
B) a judgment against the borrower for the difference between the amount owed to a lender and the value of the property sold at a foreclosure sale
C) a judgment that allows the mortgage insurer to pursue the lender for losses in a foreclosure
D) none of the above
Q3) Title insurance:
A) insures against losses on a property due to natural disasters
B) insures against losses due government restrictions on the use of the property
C) insures against losses due to changes in interest rates
D) none of the above
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Value, Leverage, and Capital Structure
Available Study Resources on Quizplus for this Chatper
10 Verified Questions
10 Flashcards
Source URL: https://quizplus.com/quiz/69711
Sample Questions
Q1) Depreciation is defined as a _______________ but not a cash outlay.
A) cash expense
B) tax deductible expense
C) production cost
D) part of your cash flow
E) none of the above
Q2) Investors purchase multiple properties to:
A) diversify a portfolio
B) maximize investment return
C) minimize risk
D) a and b
E) all of the above
Q3) Using the formula ROE = [NOI - rD] /Equity,the term positive leverage implies that the return On equity is ________________ than the return on assets if the cost of debt "r" is ___________ than ROA where ROA = NOI/EQUITY.
A) greater,less
B) less,greater
C) minimal,maximized
D) a and b
E) a and c
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Federal Taxation and Real Estate Finance
Available Study Resources on Quizplus for this Chatper
17 Verified Questions
17 Flashcards
Source URL: https://quizplus.com/quiz/69710
Sample Questions
Q1) The Tax Act of 1993 raised the marginal tax rates on ordinary income to:
A) 28%
B) 39.6%
C) 51.8%
D) 42.5%
Q2) For a real estate partnership investment the "at-risk" amount is:
A) the investor's cash contribution
B) tax basis of any property contributed
C) non-recourse debt borrowed from the partnership
D) a plus b plus c
E) a plus b
Q3) Generally,the capital loss limitation rule allows taxpayers to offset capital losses against:
A) ordinary income
B) capital gains
C) passive gains
D) portfolio income
To view all questions and flashcards with answers, click on the resource link above.
Page 18
Chapter 17: Sources of Funds for Commercial Real Estate
Source URL: https://quizplus.com/quiz/69709
Sample Questions
Q1) Thrifts specialize in:
A) residential loans
B) multi-family properties
C) commercial properties
D) none of the above
Q2) The primary institutional investors in equity real estate are:
A) pension funds
B) federal credit agencies
C) unions
D) none of the above
Q3) Insurance companies invest primarily in:
A) CMOs
B) commercial mortgages
C) residential mortgages
D) none of the above
Q4) The largest supplier of commercial real estate debt is:
A) state and local retirement funds
B) commercial banks
C) thrifts
D) pension funds
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: Acquisition, Development, and Construction Financing
Available Study Resources on Quizplus for this Chatper
47 Verified Questions
47 Flashcards
Source URL: https://quizplus.com/quiz/69708
Sample Questions
Q1) 18-38.Instead of buying land outright developers may prefer:
A) to use subdivision trusts
B) to use partial releases
C) to use release patterns
D) to use options to purchase
Q2) 18-43.Release provisions written into ADC loans are mainly for the protection of the:
A) builder
B) developer
C) speculator
D) lender
Q3) 18-26.Raw land is acquired by two types of investors.They are:
A) developer/warehouser
B) developer/speculator
C) speculator/warehouser
D) speculator/lender
To view all questions and flashcards with answers, click on the resource link above.
Page 20
Chapter 19: Permanent Financing of Commercial Real
Estate Properties
Available Study Resources on Quizplus for this Chatper
19 Verified Questions
19 Flashcards
Source URL: https://quizplus.com/quiz/69707
Sample Questions
Q1) 19-11.The following is/are advantages of equity participation agreements for the borrower:
A) reduced risk to the owner
B) retain ownership of the property
C) lower interest obligation
D) all of the above
Q2) 19-15.Compared to standard loan agreements the risk of an equity participation loan:
A) is increased for the lender and the investor
B) is decreased for the lender and the investor
C) is increased for the investor and decreased for the lender
D) is increased for the lender and decreased for the investor
Q3) A lease that is a substitute for debt financing is:
A) operating lease
B) capital lease
C) financing lease
D) sale-leaseback lease
To view all questions and flashcards with answers, click on the resource link above.
Page 21
Chapter 20: Ownership Structures for Financing and Holding Real Estate
Available Study Resources on Quizplus for this Chatper
36 Verified Questions
36 Flashcards
Source URL: https://quizplus.com/quiz/69706
Sample Questions
Q1) The main determinants of the form of ownership for real estate are:
A) income tax laws
B) issues of liability
C) access to capital markets
D) a and b
E) all of above
Q2) 20-28.A benefit of the S-Corporation for holding real estate is:
A) no limit to the number of shareholders
B) access to large equity markets
C) no double taxation
D) all of the above
Q3) 20-31.The Real Estate Investment Trust Act authorizes:
A) REITs are subject to double taxation in exchange for limited liability
B) REITs are exempt from double taxation as long as certain conditions are met
C) REITs are considered a form of limited partnership
D) REITs are exempt from federal securities laws
To view all questions and flashcards with answers, click on the resource link above. Page 22
Chapter 21: Real Estate in a Portfolio Context
Available Study Resources on Quizplus for this Chatper
17 Verified Questions
17 Flashcards
Source URL: https://quizplus.com/quiz/69705
Sample Questions
Q1) The capital asset pricing model (CAPM)suggests that assets with a Beta of one will have an expected return:
A) equal to that of the market
B) less than that of the market
C) more than that of the market
D) unrelated to that of the market
Q2) Real Estate Investment Trusts (REITs):
A) invest in real estate related assets
B) issue stock for purchase by investors
C) may invest in mortgages
D) all of the above
Q3) A 1992 study found that at that time real estate as a percent of all pension fund assets represented about:
A) one per cent
B) four per cent
C) nine per cent
D) twenty percent
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter 22: Liability, Agency Problems, Fraud, and Ethics in Real Estate Finance
Available Study Resources on Quizplus for this Chatper
5 Verified Questions
5 Flashcards
Source URL: https://quizplus.com/quiz/69704
Sample Questions
Q1) The law excludes from the category of an owner or operator "a person,who,without participating in the management of a vessel or facility,holds an indicia of ownership primarily to protect his security interest in the vessel or facility." This is termed:
A) secured-lender exemption
B) strict liability
C) potentially responsible parties
D) joint and several liability
Q2) A lender that has a property taken because of its use in drug transactions can use a defense referred to:
A) due diligence
B) good faith dealings
C) breach of contract
D) innocent-owner
Q3) Making of a promise with no intention of fulfilling it is referred to as:
A) nondisclosure fraud
B) promissory fraud
C) tort
D) fiduciary
To view all questions and flashcards with answers, click on the resource link above. Page 24