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 monthlyon 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 REITs shares can be owned by five or fewer shareholders

(C) At least 95% of a REITs 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