Real Property Valuation
Exam Bank
Course Introduction
Real Property Valuation explores the principles, methods, and practices used to determine the value of real estate for a variety of purposes, including sales, financing, taxation, and investment analysis. The course covers key valuation approaches such as the cost, income, and market comparison methods, as well as the factors influencing property value, including location, market trends, and legal considerations. Students will engage with case studies, practical applications, and valuation techniques, gaining skills essential for real estate professionals, assessors, appraisers, and investors.
Recommended Textbook
Real Estate Finance Theory and Practice 6th Edition by Terrence M. Clauretie
Available Study Resources on Quizplus
22 Chapters
473 Verified Questions
473 Flashcards
Source URL: https://quizplus.com/study-set/3509 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) Financial markets can be partitioned into two categories:
A) primary and secondary
B) liquid and non-liquid securities
C) long-term and temporary instruments
D) money markets and capital markets
Answer: D
Q2) 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
Q3) Savings and Loan Associations and Mutual Savings Banks:
A) have the same form of ownership-both are stock companies
B) differ in their form of ownership-one is a cooperative,the other is a stock company are also called thrifts
C) a and c
D) none of the above
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
Page 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) Other things being equal,the greater the rate of growth of money:
A) the better off we are
B) the greater the rate of inflation
C) the higher the standard of living for the general population
D) the higher the poverty level
Answer: B
Q2) Liquidity,income,and price-anticipation effects:
A) are related to the money supply increase
B) are related to the interest rate increase
C) are related to the bond market increases
D) operate autonomously in the market and are not related to each other
Answer: A
Q3) The risk associated with the possibility that a bond issuer could legally repurchase outstanding bonds at their face value is called:
A) callability risk
B) default risk
C) purchasing power risk
D) maturity risk
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) If an investor owned an equity position in a building and wanted to increase value using leverage he could do so by either leveraging the property or borrowing personally.However,leverage is usually applied at the property,not the personal level because:
A) the investor could make the personal loan against cash flows from the property,leaving the property available as collateral for additional loans
B) the investor cannot take personal loans to leverage an increased value based on cash flows
C) leverage can be created cheaply from personal loans; it is not added value
D) personal loans cannot be applied to cash flows; only to real property
Answer: A
Q2) Pass-through Mortgage Backed Securities (MBSs)provide the investor with:
A) less prepayment risk as the originator of a specific mortgage
B) a prorated share of all monthly principal and interest payments
C) no risk from prepayments of loans
D) a weighted average of the monthly principal but not interest payments
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) Suppose you take an FRM of $150,000 at 7.5% for 30 years.If you repay this mortgage at the end of year five,what is the outstanding balance?
A) $52,342
B) $87,071
C) $141,574
D) $141,926
E) none of the above
Q2) Suppose you take an FRM of $150,000 at 7.5% for 30 years.What is the breakdown of interest and principal for the payment in month 240?
A) $1048.82 interest,$0 principal
B) $0 interest,$1048.82 principal
C) $493.50 interest,$555.32 principal
D) $555.32 interest,$493.50 principal
E) cannot be determined
Q3) The Truth-in-Lending law:
A) requires the lender disclose the APR on a mortgage loan
B) requires the lender disclose the total finance charges on a mortgage loan
C) provides for penalties for failure to accurately disclose the APR
D) all of the above
Page 6
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) Disintermediation refers to:
A) the withdrawal of funds from financial institutions by depositors in excess of deposits
B) financial institutions withdrawing from the Federal Reserve System
C) financial institutions shifting from FHA loans to conventional loans
D) none of the above
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) 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
To view all questions and flashcards with answers, click on the resource link above. Page 7
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) Suppose you have a 30-year ARM with a balance at the EOY2 of $139,632 and a monthly payment for year 3 of $1239.88.If the margin is 2.50,what is the value of the index to produce this payment?
A) 10.00%
B) 7.50%
C) 12.50%
D) 7.64%
E) cannot be determined
Q2) The alternative mortgage instrument that has the least amount of interest rate risk for the lender is:
A) FRM
B) GPM
C) ARM
D) SAM
Q3) The following is not an alternative mortgage instrument:
A) SAM
B) RAM
C) HFR
D) FLIP
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) Federal Home Loan Banks obtain a significant amount of the funds they lend to thrifts from the sale of FHLB bonds in the capital market.These bonds are:
A) guaranteed by the US government
B) not guaranteed,but the thrifts are required to purchase them in order to receive loans from a FHLB
C) not guaranteed,but provide a high rate of return when compared to less risky bonds
D) not guaranteed,but the banks operate under a federal charter and government supervision
Q2) A loan that involves regular increases in payment at a fixed rate,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.
10
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) The term "economics of information" refers to a theory that proposes that:
A) minority group members are usually not informed of all of their fights as a borrower,and are therefore not allowed to take advantage of economic opportunities available to others
B) often the expense of acquiring information is greater than the benefits. In such a case,discrimination may occur
C) firms with the best information about their borrowers are almost always more successful. But,it may be illegal to ask borrowers to supply that information or to base the loan decision upon that information
D) discriminatory firms generally have to spend more to ensure that their records comply with the strict letter of the regulations
Q2) Which of the following methods has the federal government focused on to regulate discrimination and enforce the ECOA Act?
A) effects method
B) intent method
C) practices method
D) screening method
To view all questions and flashcards with answers, click on the resource link above.
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) 10-10.The purpose of the Farm Credit Assistance Financial Corporation is to:
A) provide capital to Federal Land Banks
B) provide capital to Farm Credit Banks
C) provide capital to banks for cooperatives
D) all of the above
Q2) 10-16.Mortgage quality can be affected by all of the following except:
A) mortgage insurance status
B) loan-to-value ratio
C) status as residential or commercial
D) location
E) term of the loan
Q3) 10-31.The mortgage-related security that goes the furthest in rearranging the cash flows from a pool of mortgages is:
A) mortgage pay-through bonds
B) collateralized mortgage obligations
C) mortgage backed bonds
D) mortgage pass-through securities
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) 11-23.A security for which the cash flows derived from mortgages are rearranged in terms of amount and timing is referred to as:
A) mortgage-derivative security
B) valuation
C) interest-contingent security
D) interest rate duration
Q2) 11-18.If the value of the IO strip is most sensitive to changes in the market rate when this rate is between 100 and 300 basis points below the coupon on the pool,then those investors who desire to obtain the hedging benefits of the IO strip should purchase:
A) strips of passthroughs 100-300 points below the market rate
B) only strips of passthroughs at the market rate
C) strips of passthroughs 100-300 points above the market rate
D) only PO strips 100-300 points below the market rate
Q3) 11-19.The CPR of passthroughs refers to:
A) coupon premium risk
B) coupon percentage rate
C) constant prepayment rate
D) cardio-pulmonary resuscitation
To view all questions and flashcards with answers, click on the resource link above.
13
Chapter 12: Controlling Default Risk Through Borrower
Qualification Loan Underwriting and Contractual Relationships
Available Study Resources on Quizplus for this Chatper
41 Verified Questions
41 Flashcards
Source URL: https://quizplus.com/quiz/69714
Sample Questions
Q1) Default occurs when the borrower fails to:
A) make timely payments on the loan
B) repay the principal of the loan
C) neither a nor b
D) both a and b
Q2) 12-34.The number of states that require that first mortgages be non-recourse through anti-deficiency judgment legislation are:
A) all,at present
B) six,at present
C) twelve,at present
D) all states except Hawaii
Q3) 12-18.The process of determining and controlling the risk of loss on a residential loan includes:
A) contractual agreements
B) borrower qualification and loan underwriting
C) real property loan stipulations
D) both a and b
14
To view all questions and flashcards with answers, click on the resource link above.
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) 13-15.A promissory note represents:
A) the borrower's promise to obtain the loan
B) the borrower's promise to repay the loan
C) a deed
D) a commitment to be a part of the closing file
Q2) 13-22.The following is not considered one of the stages in the appraisal process:
A) ordering an appraisal
B) signing an appraisal
C) monitoring an appraisal
D) evaluating an appraisal
Q3) 13-40.A record stating the amounts that are to go to the buyer and seller when a loan is closed is called:
A) note
B) truth-in-lending disclosure
C) settlement statement
D) recording
To view all questions and flashcards with answers, click on the resource link above. Page 15
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) Foreclosure is a process that:
A) returns the property to a borrower when the loan is paid off
B) is consistent in all states as required by federal law
C) is exercised by a buyer of the property
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) The following is a NOT a proper list of potential commercial properties:
A) hotels,motels,urban office buildings
B) suburban office buildings,shopping malls,strip centers
C) warehouses,mini-warehouses,theme parks
D) restaurants,fast-food facilities,nursing centers
E) hospitals,apartment complexes,casinos,public schools
Q2) A key non-real estate source of property cash flow is:
A) tax shelter
B) managerial talent
C) use of equity financing
D) debt financing
E) all the above
Q3) In any property cash flows are derived from two avenues:
A) operating cash flows
B) from sale of property
C) management costs
D) a and c
E) a and b
To view all questions and flashcards with answers, click on the resource link above.
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) Income from a limited partnership is classified as:
A) active
B) passive
C) portfolio
D) deferred
Q2) 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
Q3) 16-14.A tax credit is given for investing in:
A) rehabilitating historic structures
B) personal residence for disabled people
C) low-income housing
D) all of the above
E) a and c
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) The largest supplier of commercial real estate debt is:
A) state and local retirement funds
B) commercial banks
C) thrifts
D) pension funds
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) Thrifts specialize in:
A) residential loans
B) multi-family properties
C) commercial properties
D) none of the above
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) 18-31.The city or county where the development is taking place may charge the developer ____________________to cover the cost of burden to the infrastructure.
A) impact fees
B) carrying fees
C) community growth fees d all of the above
Q2) The speculator is interested in:
A) appreciation of the land
B) depreciation of the land
C) immediate plans for the land
D) none of the above
Q3) 18-24.The purpose of an option is:
A) to exercise a lease on the property
B) to be able to purchase the land at a future time
C) to secure land without securing immediate financing
D) both b and c
Q4) 18-19.If the developer fails to initiate construction,he will generally:
A) be subject to a fee
B) have the commitment fee returned
C) have no right to a return of the commitment fee
D) not be penalized
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) 19-16.A sale-leaseback refers to the situation where:
A) a property is sold and the seller leases the property from the buyer
B) a property is sold and a repurchase agreement is signed
C) a property is sold and a subsequent tax-free exchange is made
D) a property that is leased is subsequently sold
Q2) 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
Q3) Between residential and commercial loans the following is NOT true:
A) long-term commercial loans involve a more intricate underwriting process
B) residential loans have prepayment penalties,commercial loans do not
C) a clause in a residential loan allows the lender to step in and collect lease payments directly from the tenants in the event the borrower defaults on the loan
D) b and c
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) 20-20.The form of property ownership that suffers from double taxation is:
A) sole ownership
B) partnership
C) C-corporation
D) all of the above
Q2) 20-36.REITs essentially operate as:
A) mutual funds
B) 401(k)plans
C) real estate brokers
D) depository institutions
Q3) 20-24.A condition for a REIT to be able to sell its real estate property is:
A) It has held the property for at least five years
B) during the four-year period prior to the sale it must have incurred capital expenditures on the property in excess of 25% of its sales price
C) it must have sold more than five properties during the same year
D) it must have acquired property through a foreclosure
To view all questions and flashcards with answers, click on the resource link above.
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) 21-11.Residual risk refers to:
A) liquidity risk of real estate
B) difficulty of other than large investors to diversify real estate holdings
C) cost of obtaining information to make an informed and rational investment decision
D) the risk of diversifying a portfolio
Q2) 21-16.The major risks associated with investment in real estate include:
A) marketability risk
B) information risk
C) residual risk
D) none of the above
E) all of above
Q3) At a point where the return on asset A and the return on asset B are both above their average,the numerator in the coefficient of determination will be:
A) negative
B) positive
C) can be either negative or positive
D) indeterminate
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) Making of a promise with no intention of fulfilling it is referred to as:
A) nondisclosure fraud
B) promissory fraud
C) tort
D) fiduciary
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) 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
To view all questions and flashcards with answers, click on the resource link above. Page 24