PROPERTY VALUATION & INVESTMENT EXAM
QUESTIONS AND CORRECT ANSWER WITH
EXPLANATION LATEST 2025-2026
1.
The primary goal of property valuation is to:
A. Estimate market value
B. Set taxes
C. Approve loans
D. Transfer title
Answer: A
Rationale: Valuation determines the most probable market value.
2.
An investment property is primarily purchased for:
A. Income or capital appreciation
B. Personal use
C. Government use
D. Insurance coverage
Answer: A
Rationale: Focus is financial return.
3.
Net Operating Income (NOI) is:
A. Income after operating expenses
B. Income after taxes and debt
C. Gross rent only
D. Loan amount
Answer: A
Rationale: NOI excludes financing costs and taxes.
4.
,Capitalization rate is calculated as:
A. NOI ÷ Property Value
B. Rent ÷ Taxes
C. Loan ÷ Income
D. Price ÷ Square feet
Answer: A
Rationale: Measures return on investment.
5.
Higher cap rate generally indicates:
A. Higher risk
B. Lower risk
C. No risk
D. Government property
Answer: A
Rationale: Investors demand higher returns for higher risk.
6.
Cash flow in real estate is:
A. Income after all expenses and debt service
B. Gross rent only
C. Property value
D. Loan amount
Answer: A
Rationale: Actual money left to investor.
7.
Positive cash flow means:
A. Income exceeds expenses
B. Expenses exceed income
C. No income
D. Property loss
Answer: A
Rationale: Property generates profit.
, 8.
Negative cash flow means:
A. Expenses exceed income
B. Income exceeds expenses
C. No expenses
D. High appreciation
Answer: A
Rationale: Property operates at a loss.
9.
Gross Rent Multiplier (GRM) is:
A. Price ÷ Gross Rent
B. Rent ÷ Taxes
C. Loan ÷ Income
D. Cost ÷ Depreciation
Answer: A
Rationale: Quick valuation tool.
10.
Return on Investment (ROI) measures:
A. Profit relative to investment cost
B. Loan approval
C. Tax rate
D. Insurance cost
Answer: A
Rationale: Profitability measure.
11.
Cash-on-cash return measures:
A. Cash income vs cash invested
B. Loan value vs property value
C. Taxes vs rent
QUESTIONS AND CORRECT ANSWER WITH
EXPLANATION LATEST 2025-2026
1.
The primary goal of property valuation is to:
A. Estimate market value
B. Set taxes
C. Approve loans
D. Transfer title
Answer: A
Rationale: Valuation determines the most probable market value.
2.
An investment property is primarily purchased for:
A. Income or capital appreciation
B. Personal use
C. Government use
D. Insurance coverage
Answer: A
Rationale: Focus is financial return.
3.
Net Operating Income (NOI) is:
A. Income after operating expenses
B. Income after taxes and debt
C. Gross rent only
D. Loan amount
Answer: A
Rationale: NOI excludes financing costs and taxes.
4.
,Capitalization rate is calculated as:
A. NOI ÷ Property Value
B. Rent ÷ Taxes
C. Loan ÷ Income
D. Price ÷ Square feet
Answer: A
Rationale: Measures return on investment.
5.
Higher cap rate generally indicates:
A. Higher risk
B. Lower risk
C. No risk
D. Government property
Answer: A
Rationale: Investors demand higher returns for higher risk.
6.
Cash flow in real estate is:
A. Income after all expenses and debt service
B. Gross rent only
C. Property value
D. Loan amount
Answer: A
Rationale: Actual money left to investor.
7.
Positive cash flow means:
A. Income exceeds expenses
B. Expenses exceed income
C. No income
D. Property loss
Answer: A
Rationale: Property generates profit.
, 8.
Negative cash flow means:
A. Expenses exceed income
B. Income exceeds expenses
C. No expenses
D. High appreciation
Answer: A
Rationale: Property operates at a loss.
9.
Gross Rent Multiplier (GRM) is:
A. Price ÷ Gross Rent
B. Rent ÷ Taxes
C. Loan ÷ Income
D. Cost ÷ Depreciation
Answer: A
Rationale: Quick valuation tool.
10.
Return on Investment (ROI) measures:
A. Profit relative to investment cost
B. Loan approval
C. Tax rate
D. Insurance cost
Answer: A
Rationale: Profitability measure.
11.
Cash-on-cash return measures:
A. Cash income vs cash invested
B. Loan value vs property value
C. Taxes vs rent
