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Question 1.

1.(TCO A) Real estate is an appropriate investment vehicle for ______________________________ .(Points : 5)

individuals, but not for institutions such as pension funds and life insurance companies

institutions such as pension funds and life insurance companies, but not for individuals

individuals and institutions, depending upon their time horizons and investment goals

investors in debt instruments but not for investors in equity instruments

Question 2.

2.(TCO A)Which of the following is acontributing factor to the inefficiency of real estate markets?(Points : 5)

information is costly and difficult to obtain

transaction costs are high

the product is differentiated

all of the above

Question 3.

3.(TCO A) Knowledgeable, profit-oriented landlords seek to operate at a level where ___________________________ .(Points : 5)

average revenue equals average cost

economic rent equals marginal cost

marginal revenue equals marginal cost

average revenue equals marginal cost

Question 4.

4.(TCO A) Linkages are ________________________________ .(Points : 5)

relationships between businesses that require them to be in close proximity

the transport modes that enable people and things to travel between discrete sites

relationships between people that make them want to be in close proximity

relationships that require movement of people or things between sites

Question 5.

5.(TCO A,B,C) To forecast future benefits from a proposed venture, which of the following should be considered?(Points : 5)

The property's immediate past operating history

Anticipated changes in the social and political environment

The likely change in a property's market value over the holding period

All of the above

Question 6.

6.(TCO A,B,C) A shopping center's trade area is ________________________ .(Points : 5)

the area in which travel time to the center does not exceed approximately 15 minutes

determined by physical barriers to the flow of customer traffic

the approximate geographical area from within which tenants will be drawn

the geographic area from within which the major portion of patronage is drawn

Question 7.

7.(TCO A,B,C) A property's desirability, relative to competing properties, is influenced by all of the following except ______________ .(Points : 5)

neighborhood economic and social conditions

relative physical durability

relative functional efficiency

the owner's income tax bracket

Question 8.

8.(TCO A,B,C) All of the following are locational characteristics, except _________________ .(Points : 5)

neighborhood influences

functional obsolescence

externalities

subdivision controls

Question 9.

9.(TCO A,B,C) When the rate of return on assets exceeds the cost of borrowing, it represents ________________ .(Points : 5)

negative spread

positive spread

favorable spread

unfavorable spread

Question 10.

10.(TCO A,B,C) Which one of the following institution lenders accounts for the greatest volume of real estate loans?(Points : 5)

Commercial banks

Life insurance companies

Pension funds

Sellers

Question 11.

11.(TCO C, D) A note provision that permits the lender to declare the entire loan balance due and payable in the event of default is called _______________ .(Points : 5)

an acceleration clause

a waiver of rights clause

a penalties clause

a declaration of subservience clause

Question 12.

12.(TCO C, D) If there is no loan origination fee and no discount points, the face amount of a wrap-around mortgage ____________________ .(Points : 5)

will exceed the amount of loan funds disbursed

will be less than the amount of loan funds disbursed

will equal the amount of loan funds disbursed

will bear no consistent relationship to the amount disbursed

Question 13.

13.(TCO C, D) The size of the annual debt service depends upon _____________________ .(Points : 5)

the amount of the loan

the interest rate

the amortization period

all of the above

Question 14.

14.(TCO C, D) If a borrower pays discount points or a loan origination fee, one consequence of paying the loan off early (where there is no prepayment penalty) is __________________________ .(Points : 5)

a decrease in the effective interest rate

an increase in the effective interest rate

no impact on effective interest

an increase or a decrease in effective interest, depending on how soon in the amortization period the prepayment occurs

Question 15.

15.(TCO C, D) The real rate of interest on a fixed-rate loan ____________________ .(Points : 5)

is the same as the effective rate

is reduced when inflation increases during the period of the loan

is increased when inflation increases during the period of the loan

is adjusted to reflect the impact of inflation during the period of the loan

Question 16.

16.(TCO C, D) Potential disadvantages of the limited partnership include _______________________________________ .(Points : 5)

losses for all limited partners, without exception, are treated as passive in nature

losses in excess of $25,000 in any one taxable year are treated as passive in nature

losses are treated as passive in nature, if the partner's gross income exceeds $125,000

losses are treated as passive, as the partner's gross income moves from $100,000 to $125,000

Question 17.

17.(TCO C, D) Which is a key difference between tenancy in common and joint tenancy?(Points : 5)

Tenancy in common carries right of survivorship

Joint tenancy interests must be equal and undivided

Tenancy in common interests must be equal but need not be undivided

Joint tenancy interests are taxed as an association

Question 18.

18.(TCO D) The realized gain on disposal of a property is ___________________________ .(Points : 5)

always taxed as ordinary income

the amount on which tax is due in the year of disposal

consideration paid on acquisition, minus consideration received on disposal

the market value of consideration received, minus the adjusted tax basis of property conveyed

Question 19.

19.(TCO D) Which one of the following would not qualify as a like-kind exchange?(Points : 5)

Limited partnership interest for interest in a land trust

Vacant land for improved property

Rural land for urban land

Shopping center for an apartment complex

Question 20.

20.(TCO D) The tax basis of property acquired in a like-kind exchange must be allocated between land and improvements ________________________ .(Points : 5)

in the same ratio as used by the previous owner

in a ratio that reflects relative market values of land and improvements at the time of the exchange

in the same ratio as used for the property tendered in the exchange

as specified in the exchange agreement