Deck 1: The Nature of Real Estate and Real Estate Markets

Question 1

As of December 2008,the market value of outstanding real estate mortgage debt was:

A)greater than the market value of corporate equities
B)less than the market value of U.S.Treasury securities
C)less than the market value of corporate and foreign bonds
D)greater than the market value of corporate,foreign,and U.S.Treasury debt securities combined

Answer 1

D

Question 2

Each property has unique features,whether it is its age,the building design of its structures,or its location.As such,real estate markets,in contrast to other goods,are considered:

A)homogeneous
B)heterogeneous
C)substitutes
D)complements

Answer 2

B

Question 3

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)Motor home

Answer 3

C

Question 4

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

Question 5

In 2007,the housing market was widely viewed as:

A)a resilient asset class that significantly softened the severity of the recession
B)a surging market pushing prices and new construction to unprecedented levels
C)the primary cause of a major economic downturn
D)unrelated to the condition of the U.S.economy

Question 6

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

Question 7

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

Question 8

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

Question 9

Competition in the _________,where households and firms compete for the currently available supply of locations and space,determines the level of rental income for each submarket and property.

A)user market
B)capital market
C)government
D)local market

Question 10

When the value of land is considered,it is important to distinguish between land and raw land.Raw land refers to a(n):

A)building site
B)structure on the land
C)property's infrastructure
D)area that does not include any improvements

Question 11

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

Question 12

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

Question 13

As of 2008,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

Question 14

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

Question 15

The demand for real estate derives from the need that participants in the user market have for shelter and convenient access to other locations.The primary participants in the user market include all of the following EXCEPT:

A)owner occupants
B)tenants
C)renters
D)pension fund managers

Question 16

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

Question 17

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

Question 18

What proportion of U.S.households own their home?

A)One-third
B)One-half
C)Two-thirds
D)Three-fourths

Question 19

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)Local market

Question 20

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