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- Download: http://solutionzip.com/downloads/15-mcq-at-the-end-of-8-years-your-friend-wants-to-have/
- 1. At the end of 8 years, your friend wants to have $50,000 saved for a down payment on a house. He expects to earn 8%—compounded monthly—on his investments over the next 8 years. How much would your friend have to put in his investment account each month to reach his goal?
- (A) $188
- (B) $374
- (C) $392
- (D) $521
- 2. What document usually summarizes the sources, disbursements, charges and credits associated with a real estate closing?
- (A) The purchase contract
- (B) The deed of trust
- (C) The listing agreement
- (D) The settlement statement
- 3. An appraisal usually contains three approaches to valuation. Which of the following is NOT one of those approaches?
- (A) The Market Approach
- (B) The Ratio Approach
- (C) The Cost Approach
- (D) The Income Approach
- 4. The subject of an appraisal has only two bedrooms, but one of the comparables used in the appraisal has three. If the adjustment for a third bedroom is $5,000, the adjustment would be:
- (A) A $5,000 increase to the comparable’s selling price
- (B) A $5,000 decrease to the comparable’s selling price
- (C) A $5,000 increase to the subject’s selling price
- (D) A $5,000 decrease to the subject’s selling price.
- 5. Which of the following is NOT a good method of title assurance?
- (A) Seller provides a warranty in the deed
- (B) An attorney searches recorded documents
- (C) Title insurance is purchased
- (D) Seller provides a quitclaim deed
- 6. For which of the following reasons would a business prefer to own space rather than lease it?
- (A) The business demands specialized or unique facilities
- (B) Owning allows the business to develop skills in operating, maintaining, and repair real estate and the associated facilities
- (C) Owning reduces operating flexibility
- (D) The capital commitments with owning are lower than the capital commitments associated with leasing
- (E) All of the above are reasons a business would prefer to own space rather than lease it
- 7. A building owner charges net rent of $20 in the first year, $21 in the second year, and $22 in the third year. Using a 10 percent discount rate, what is the effective rent over the three years?
- (A) $20.00
- (B) $20.94
- (C) $21.00
- (D) $21.73
- (E) $22.00
- 8. Which of the following is FALSE regarding cap rates?
- (A) Excess supply tends to drive cap rates up
- (B) Rising interest rates generally tends to lower cap rates
- (C) Excess demand and falling interest rates results in lower cap rates
- (D) Excess demand leads to lower cap rates
- 9. Which of the following leads to rent premiums?
- (A) Apartments on periphery of site, higher floors with no elevators
- (B) Second or third levels in multi-level malls
- (C) Middle floors in office building
- (D) Apartments on higher floors with elevators
- 10. Which of the following is TRUE for a net lease?
- (A) All expenses are paid by the owner
- (B) All expenses are paid by the tenant
- (C) All expenses are paid by the lender
- (D) All expenses are paid by the investor
- 11. Which of the following tends to lower effective rents?
- (A) Percentage rent
- (B) Step up provisions
- (C) Concessions
- (D) CPI adjustment
- 12. Which of the following is NOT a requirement of REITs?
- (A) A REIT must have at least 100 stockholders
- (B) Not more than 50% of a REIT’s shares can be owned by five or fewer shareholders
- (C) At least 95% of a REIT’s income must be distributed to shareholders
- (D) All of the above are REIT requirements
- 13. An investor is considering renovating a building. The total cost of renovation is expected to be $100,000, of which 75% can be borrowed. Given the after-tax cash flows to the equity investor as showed below, what is the incremental return from renovating?
- 1 2 3 4 5
- ATCF after renovation 9,200 10,000 12,000 14,000 316,000
- ATCF-no renovation 10,000 10,200 10,440 10,680 160,900
- (A) 9.75%
- (B) 10.14%
- (C) 15.32%
- (D) 12.67%
- 14. The adjusted basis can be defined as:
- (A) Original cost + capital improvements – accumulated depreciation
- (B) Sales price – mortgage balance – sales costs
- (C) Sales price – accumulated depreciation
- (D) Original cost – mortgage balance – sales costs
- 15. Which of the following statements regarding the sales comparison approach to appraisal is TRUE?
- (A) As a “rule of thumb” transactions involving foreclosures should be discounted by 10 percent
- (B) The comparable buildings’ characteristics are more important that the comparable properties’ location for performing the sales comparison
- (C) The comparable sales must involve transactions between unrelated individuals
- (D) The only factors important for comparable analysis are property size, building size, age of the building, and the condition of building
- Download: http://solutionzip.com/downloads/15-mcq-at-the-end-of-8-years-your-friend-wants-to-have/
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