When viewed as a tangible asset, real estate can be defined as the land and its permanent improvements. Improvements on the land include:
A. fences
B. walkways
C. sewer systems
D. streets correct answers A. Fences
. Real estate is property, which can be either a tangible or an intangible ass...
FIN 336 Exam 1 Studying || A+ Verified Solutions.
When viewed as a tangible asset, real estate can be defined as the land and its permanent
improvements. Improvements on the land include:
A. fences
B. walkways
C. sewer systems
D. streets correct answers A. Fences
. Real estate is property, which can be either a tangible or an intangible asset. Which of the
following would be considered an intangible asset?
A. Land
B. Building
C. Mortgage
D. Fence correct answers C. Mortgage
If we desire to classify land by its use, land that does not include any improvements to the land
would be categorized as:
A. "Raw" land
B. Building site
C. Developed land
D. Property infrastructure correct answers A. Raw land
The size of a single family residential lot is typically:
A. less than one acre
B. between one and two acres
C. between two and three acres
D. greater than three acres correct answers A. Less than an acre
As of 2011, the single largest asset category in the net worth portfolios of households is:
A. government and corporate bonds
B. stocks and mutual fund shares
C. consumer durable goods
D. housing correct answers D. Housing
Real estate values derive from the interaction of three different sectors in the economy. Which of
the following sectors serves to allocate financial resources among households and firms requiring
funds?
A. User market
B. Capital market
C. Government
D. Property market correct answers B. Capital Market
The demand for real estate derives from the need that market participants (e.g., owner occupants,
tenants, renters) have for shelter and convenient access to other locations. This competition for
physical location and space occurs in the:
,A. User Market
B. Capital Market
C. Government Sector
D. Property Market correct answers A. User Market
The expected stream of rental income is capitalized into value by converting expected future
cash flows into present value through a process called:
A. amortization
B. discounting
C. compounding
D. accounting correct answers B. Discounting
Capital markets can be divided into four main categories: private equity, public equity, private
debt, and public debt. An example of a real estate asset that trades in the private equity market is:
A. real property
B. home mortgages
C. equity REITs
D. mortgage backed securities correct answers A. Real property
Primarily through land use controls and property tax policy, which of the following branches of
government has the largest influence on real estate values?
A. Local government
B. State government
C. National government
D. Foreign government correct answers A. Local Government
Competition for the currently available supply of locations and space coupled with the existing
supply of leasable space, determines:
A. the current level of rental rates for each submarket and property
B. the riskiness of the expected cash flows of an income-producing property
C. the timing of the expected cash flows of an income-producing property
D. the cost of financing the purchase of a property correct answers A. The current level of rental
rates for each submarket and property
Each property has unique features, whether it is its age, the building design of its structures, or its
location. As such, real estate markets consist of assets that are considered:
A. homogeneous
B. heterogeneous
C. substitutes
D. complements correct answers B. heterogeneous
Consistently the investment target of pension funds, publicly traded real estate companies, and
real estate funds, large commercial properties valued well over $10 million are often referred to
as:
A. segmented property
B. investment-grade property
, C. speculative-grade property
D. immobile property correct answers B. Investment Grade Property
By the third quarter of 2011, U.S. households had accumulated $6.2 trillion in housing equity,
which represents about 11 percent of their net worth. What proportion of U.S. households own
their home?
A. one-third
B. one-half
C. two-thirds
D. three-fourths correct answers C. Two thirds
The national government can have a significant impact on the value of real estate through:
A. property tax policy
B. income tax policy
C. building Codes
D. real estate licensing requirements correct answers B. Income Tax Policy
The required rate of return that an individual demands on a real estate investment is determined
in the:
A. user market
B. capital market
C. government
D. local market correct answers B. Capital Market
Investors in real estate can choose to hold properties directly in the private market or indirectly
through publicly traded real estate securities. The market for buying selling, and leasing real
estate can be characterized by all of the following EXCEPT:
A. localized markets
B. highly segmented markets
C. privately negotiated contracts
D. low transaction costs correct answers D. Low transaction costs
Especially in terms of retail properties, which of the following attributes is considered the most
likely to result in drastic value differences between otherwise similar properties?
A. Structural attributes
B. Financing attributes
C. Location attributes
D. Land attributes correct answers C. Location attributes
Capital markets can be divided into two broad categories: equity interests and debt interests.
Equity investors in real estate expect to earn a return on their investment through:
A. The collection of rent and price appreciation
B. The collection of interest on the borrowed funds used to purchase the property
C. The receipt of property taxes
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