CERTIFIED GENERAL APPRAISER
EXAM QUESTIONS & ELABORATED
COMPLETE SOLUTIONS
THE FACT THAT RENTS TEND TO BE SET BY THE MARKET FOR EQUALLY
DESIRABLE SPACE REFLECTS THE PRINCIPLE OF
A. BALANCE
B. SUBSTITUTION
C. EXTERNALITIES
D. SUPPLY AND DEMAND
E. CONFORMITY - Correct Answer ✔✔ B
THE NET INCOME THAT REMAINS AFTER THE PROPER COSTS OF LABOR,
CAPITAL, AND ENTREPRENEURSHIP HAVE BEEN PAID IS
A. SURPLUS RENT
B. OPPORTUNITY COST
C. EFFECTIVE INCOME
D. LAND RENT
E. CONTRACT RENT - Correct Answer ✔✔ D
ALL OF THE FOLLOWING ARE ESSENTIAL TO THE VIALIBILITY OF AN
INDUSTRIAL DISTRICT EXCEPT
A. LABOR
B. MATERIALS
C. TRANSPORTATION
D. HIGH THECHNOLOGY
E. ENTREPRENEURSHIP - Correct Answer ✔✔ D
THE PRESENT AND FUTURE DEMAND FOR A PROPERTY AND ITS ABSORPTION
RATE ARE CONSIDERED IN A
A. VALUATION REPORT
B. MARKET FEASIBILITY STUDY
C. MARKET SEGMENTATION STUDY
D. HIGHEST AND BEST USE ANALYSIS
E. NARRATIVE APPRIASAL - Correct Answer ✔✔ B
REAL ESTATE MARKETS
A. ARE NATIONAL IN SCOPE
B. DO NOT MEET THE CRITERIA FOR A PERFECT MARKET
C. ARE CENTRALIZED IN NATURE
D. CONSIST OF USED PROPERTY ONLY
,E. ARE PREVALENT IN FORMER COMMUNIST COUNTRIES - Correct Answer ✔✔ B
THE FEDERAL DISCOUNT RATE, WHICH IS THE INTEREST RATE THAT BANKS
PAY ON THE FUNDS THEY BORROW FROM THE FEDERAL RESERVE, IS MOST
CLOSELY LINKED TO
A. THE INFLATION RATE
B. THE PRIME RATE
C. LONG-TERM YIELD RATES
D. INTEREST RATES ON 30-YEAR BONDS
E. MINICIPAL BOND RATES - Correct Answer ✔✔ B
CREDIT-REGULATING DEVICES USED BY THE FEDERAL RESERVE INCLUDE
A. MORAL SUASION
B. RESERVE REQUIREMENTS
C. THE FEDERAL DISCOUNT RATE
D. THE FEDERAL OPEN MARKET COMMITTEE
E. ALL OF THE ABOVE - Correct Answer ✔✔ E
MONETARY POLICY HELPS CONTROL INFLATION BY
A. REGULATING THE MONEY SUPPLY
B. ENCOURAGING RENT CONTROL
C. REDUCING TAXES
D. REFUSING TO BALANCE THE BUDGET
E. USING A NONCALENDAR YEAR - Correct Answer ✔✔ A
THE SECONDARY MORTGAGE MARKET IS WHERE
A. MORTGAGE BANKERS ORIGINATE MORTGAGE LOANS
B. SECOND MORTGAGES ARE ORIGINATED
C. EXISTING MORTGAGES ARE BOUGHT AND SOLD
D. THE FNMA AND GNMA MAKE MORTGAGE LOANS
E. THE RTC SEARCHES FOR BUYERS OF SAVINGS AND LOAN ASSOCIATIONS -
Correct Answer ✔✔ C
WHEN INFLATION IS EXPECTED TO BE HIGH, INVESTORS TEN TO AVOID
A. EQUITY INVESTMENTS
B. LONG-TERM FIXED-INCOME INVESTMENTS
C. SHOR-TERM INVESTMENTS
D. MONEY MARKET INSTRUMENTS
E. TANGIBLES - Correct Answer ✔✔ B
MORTGAGE FINANCING AFFECTS
A. EQUITY DIVIDENDS FROM REAL ESTATE
B. EQUITY YIELDS FROM REAL ESTATE
C. MONETARY POLICY
D. FISCAL POLICY
E. BOTH A AND B - Correct Answer ✔✔ E
, A $1,5000,000 LOAN IS ISSUED WITH 5 DISCOUNT POINTS. THE LOAN BEARS AN
8% INTEREST RATE AND HAS A 9% MORTGAGE CONSTANT, WITH ANNUAL
PAYMENTS.
THE ORIGINAL ANNUAL PAYMENT WAS
A. LESS THAN $120,000
B. $120,000
C. $135,000
D. MORE THAN $150,000
E. NONE OF THE ABOVE - Correct Answer ✔✔ C
THE ANNUAL MORTGAGE CONSTANT IS
A. 8%
B. 8.25%
C. 9%
D. 9.75%
E. ABOVE 9.75% - Correct Answer ✔✔ C
WHAT IS THE AMOUNT OF THE LOAN DISCOUNT?
A. LESS THAN $75,000
B. $75,000
C. $100,000
D. $150,000
E. MORE THAN $150,000 - Correct Answer ✔✔ B
WHICH OF THE FOLLOWING IS A VALUATION STUDY?
A. MARKET VALUE APPRAISAL
B. MARKET AND MARKETABILITY STUDY
C. ABSORPTION ANALYSIS
D. FEASIBILITY STUDY
E. TECHNICAL IMPACT STUDY - Correct Answer ✔✔ A
GENERALLY, THE LEAST RELIABLE SOURCES OF SALES DATA ARE
A. BANKERS
B. APPRAISERS
C. NEWSPAPER ARTICLES
D. BROKERS
E. SELLERS - Correct Answer ✔✔ C
OPERATING INCOME DATA DO NOT INCLUDE
A. VACANCY RATE
B. REPRODUCTION COST
C. OPERATING EXPENSES
D. UTILITIES PROVIDED BY THE OWNER
E. LEASE TERMS - Correct Answer ✔✔ B
EXAM QUESTIONS & ELABORATED
COMPLETE SOLUTIONS
THE FACT THAT RENTS TEND TO BE SET BY THE MARKET FOR EQUALLY
DESIRABLE SPACE REFLECTS THE PRINCIPLE OF
A. BALANCE
B. SUBSTITUTION
C. EXTERNALITIES
D. SUPPLY AND DEMAND
E. CONFORMITY - Correct Answer ✔✔ B
THE NET INCOME THAT REMAINS AFTER THE PROPER COSTS OF LABOR,
CAPITAL, AND ENTREPRENEURSHIP HAVE BEEN PAID IS
A. SURPLUS RENT
B. OPPORTUNITY COST
C. EFFECTIVE INCOME
D. LAND RENT
E. CONTRACT RENT - Correct Answer ✔✔ D
ALL OF THE FOLLOWING ARE ESSENTIAL TO THE VIALIBILITY OF AN
INDUSTRIAL DISTRICT EXCEPT
A. LABOR
B. MATERIALS
C. TRANSPORTATION
D. HIGH THECHNOLOGY
E. ENTREPRENEURSHIP - Correct Answer ✔✔ D
THE PRESENT AND FUTURE DEMAND FOR A PROPERTY AND ITS ABSORPTION
RATE ARE CONSIDERED IN A
A. VALUATION REPORT
B. MARKET FEASIBILITY STUDY
C. MARKET SEGMENTATION STUDY
D. HIGHEST AND BEST USE ANALYSIS
E. NARRATIVE APPRIASAL - Correct Answer ✔✔ B
REAL ESTATE MARKETS
A. ARE NATIONAL IN SCOPE
B. DO NOT MEET THE CRITERIA FOR A PERFECT MARKET
C. ARE CENTRALIZED IN NATURE
D. CONSIST OF USED PROPERTY ONLY
,E. ARE PREVALENT IN FORMER COMMUNIST COUNTRIES - Correct Answer ✔✔ B
THE FEDERAL DISCOUNT RATE, WHICH IS THE INTEREST RATE THAT BANKS
PAY ON THE FUNDS THEY BORROW FROM THE FEDERAL RESERVE, IS MOST
CLOSELY LINKED TO
A. THE INFLATION RATE
B. THE PRIME RATE
C. LONG-TERM YIELD RATES
D. INTEREST RATES ON 30-YEAR BONDS
E. MINICIPAL BOND RATES - Correct Answer ✔✔ B
CREDIT-REGULATING DEVICES USED BY THE FEDERAL RESERVE INCLUDE
A. MORAL SUASION
B. RESERVE REQUIREMENTS
C. THE FEDERAL DISCOUNT RATE
D. THE FEDERAL OPEN MARKET COMMITTEE
E. ALL OF THE ABOVE - Correct Answer ✔✔ E
MONETARY POLICY HELPS CONTROL INFLATION BY
A. REGULATING THE MONEY SUPPLY
B. ENCOURAGING RENT CONTROL
C. REDUCING TAXES
D. REFUSING TO BALANCE THE BUDGET
E. USING A NONCALENDAR YEAR - Correct Answer ✔✔ A
THE SECONDARY MORTGAGE MARKET IS WHERE
A. MORTGAGE BANKERS ORIGINATE MORTGAGE LOANS
B. SECOND MORTGAGES ARE ORIGINATED
C. EXISTING MORTGAGES ARE BOUGHT AND SOLD
D. THE FNMA AND GNMA MAKE MORTGAGE LOANS
E. THE RTC SEARCHES FOR BUYERS OF SAVINGS AND LOAN ASSOCIATIONS -
Correct Answer ✔✔ C
WHEN INFLATION IS EXPECTED TO BE HIGH, INVESTORS TEN TO AVOID
A. EQUITY INVESTMENTS
B. LONG-TERM FIXED-INCOME INVESTMENTS
C. SHOR-TERM INVESTMENTS
D. MONEY MARKET INSTRUMENTS
E. TANGIBLES - Correct Answer ✔✔ B
MORTGAGE FINANCING AFFECTS
A. EQUITY DIVIDENDS FROM REAL ESTATE
B. EQUITY YIELDS FROM REAL ESTATE
C. MONETARY POLICY
D. FISCAL POLICY
E. BOTH A AND B - Correct Answer ✔✔ E
, A $1,5000,000 LOAN IS ISSUED WITH 5 DISCOUNT POINTS. THE LOAN BEARS AN
8% INTEREST RATE AND HAS A 9% MORTGAGE CONSTANT, WITH ANNUAL
PAYMENTS.
THE ORIGINAL ANNUAL PAYMENT WAS
A. LESS THAN $120,000
B. $120,000
C. $135,000
D. MORE THAN $150,000
E. NONE OF THE ABOVE - Correct Answer ✔✔ C
THE ANNUAL MORTGAGE CONSTANT IS
A. 8%
B. 8.25%
C. 9%
D. 9.75%
E. ABOVE 9.75% - Correct Answer ✔✔ C
WHAT IS THE AMOUNT OF THE LOAN DISCOUNT?
A. LESS THAN $75,000
B. $75,000
C. $100,000
D. $150,000
E. MORE THAN $150,000 - Correct Answer ✔✔ B
WHICH OF THE FOLLOWING IS A VALUATION STUDY?
A. MARKET VALUE APPRAISAL
B. MARKET AND MARKETABILITY STUDY
C. ABSORPTION ANALYSIS
D. FEASIBILITY STUDY
E. TECHNICAL IMPACT STUDY - Correct Answer ✔✔ A
GENERALLY, THE LEAST RELIABLE SOURCES OF SALES DATA ARE
A. BANKERS
B. APPRAISERS
C. NEWSPAPER ARTICLES
D. BROKERS
E. SELLERS - Correct Answer ✔✔ C
OPERATING INCOME DATA DO NOT INCLUDE
A. VACANCY RATE
B. REPRODUCTION COST
C. OPERATING EXPENSES
D. UTILITIES PROVIDED BY THE OWNER
E. LEASE TERMS - Correct Answer ✔✔ B
