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Exam (elaborations)

REAL 4000 UGA Questions and Answers

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  • Course
  • REAL 4000
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  • REAL 4000

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  • August 16, 2024
  • 20
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • uture cash i
  • REAL 4000
  • REAL 4000
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REAL 4000 UGA Questions and
Answers
What does the value of a property mortgage depend on

✓ ~~~ 1. Magnitude of expected cash flows
2. Timing of expected cash flows

3. Riskiness of expected cash flows




The possibility that the actual outcome will vary from what was expected when the

asset was purchased.

✓ ~~~ Risk



fixed amount of money paid or received at the end of every period

✓ ~~~ Ordinary annuity



future cash inflow or outflow occurring only once

✓ ~~~ lump sum payment



What are the four time Value of money operations

✓ ~~~ Compounding Operations
1. Future value of a lump sum

2. Future value of an annuity

Discounting Operation

1. Present value of a lump sum

2.Present value of an annuity

,What affects value

✓ ~~~ required yield



What is the highest degree of control you can have

✓ ~~~ Purchase price



loans for which the interest rate does not change over the life of the loan

✓ ~~~ Fixed rate



more common when rates in the market are not stable as they protect lender from

interest rate risk

✓ ~~~ adjustable rate



Why would you take an adjustable rate?

✓ ~~~ it allows the borrower to secure lower rates for the short term



Two elements of a mortgage loan

✓ ~~~ 1. The note
2. The mortgage




exact terms of financial obligation

1. Where financial terms are discussed

2. Interest rate

, 3.Fixed rate

4.Amortization

✓ ~~~ The Note



A pledge of property as a security for the note. Formal conveyance of rights to

disposition

✓ ~~~ The mortgage (DOT)



Various arrangements for fixed-rate loan

✓ ~~~ 1. Fully Amortized
2. Partially Amortized

3. Interest only

4. Negative Amortization




Fully amortized

✓ ~~~ Most Residential Consumer Real Estate Loans



Partially amortized

✓ ~~~ 1. Most commercial Real Estate loans
2. Term for amortization

3. Term to maturity (paid off before amortization term)




Interest only (NON AMORTIZING sometimes called a bullet loan)

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