REAL ESTATE FINANCE, FINAL EXAM 2 (EDITION 9
UPDATED ACTUAL QUESTIONS AND CORRECT
ANSWERS
Question:
1. If 1 point raises an effective interest rate 1/8 %, then a 6 point discount will raise a 9 1/4 % loan to an
effective rate of
Answer:
10%
Question:
2. All of the following inputs are needed to estimate a break-even point except
Answer:
discount rate
Question:
3. In figuring a break-even analysis, which of the following items are fixed expenses?
Answer:
utility costs
Question:
4. The yearly principal and interest amounts required to amortize a debt is called the
Answer:
loan constant
Question:
5. which of the following arrangements is an interest-only loan?
Answer:
$25K @ 13.75%, 3 years, $286 payment A= p (1 + n/r)^nt
Question:
6. If $56K is the current loan balance and $550 the monthly payment, of which $130 applies towards
principal, what is the interest rate on this loan?
Answer:
Question:
7. An annuity can be defined as any
Answer:
is a contract between you and an insurance company in which you make a lump-sum payment or series of
payments and, in return, receive regular disbursements, beginning either immediately or at some point in
the future.
Question:
8. when mortgages are sold to investors, funds are circulated from
, Answer:
money-rich areas to money-poor areas.
Question:
9. what is the maximum tax-exempt gift that an investor can give to a recipient each year?
Answer:
$15,000
Question:
10. Under a lease with an option to buy, where the tenant has the right of first refusal, the
Answer:
With a lease option the tenant has an exclusive right to buy at a certain price for a period of time. The right
of first refusal just gives them the right to match the sellers best offer. In some cases they might be required
to pay a certain amount more.
Question:
11. which of the following benefits applies to the investor-landlord in a sale-leaseback?
Answer:
The advantage to the investor-landlord in this type of arrangement include a fair return ON and OF the
investment in the form of rental income during the lease term and ownership of a depreciable asset already
occupied by a "good" tenant. The investor is buying a guaranteed income stream that can be sheltered
through the proper use of allowable deductions.When determining the rent to be paid on the lease, the
investor can actually manage the risk by the amount of rent received.
Question:
12. under IRS rules, a foreclosure may result in a tax, burden for the burden for the defaulted borrower
when the
Answer:
Question:
13. under a deed of trust foreclosure, the borrower's ability to recover the property after the public auction
Answer:
Question:
14. the defaulting borrowers' ability to protect their property interests prior to a public auction is called
Answer:
Question:
15. when the proceeds from a foreclosure sale exceed the balance of the delinquent loan, the surplus
money goes to the
Answer:
Question:
16. A recorded notice of a foreclosure is called a
Answer:
UPDATED ACTUAL QUESTIONS AND CORRECT
ANSWERS
Question:
1. If 1 point raises an effective interest rate 1/8 %, then a 6 point discount will raise a 9 1/4 % loan to an
effective rate of
Answer:
10%
Question:
2. All of the following inputs are needed to estimate a break-even point except
Answer:
discount rate
Question:
3. In figuring a break-even analysis, which of the following items are fixed expenses?
Answer:
utility costs
Question:
4. The yearly principal and interest amounts required to amortize a debt is called the
Answer:
loan constant
Question:
5. which of the following arrangements is an interest-only loan?
Answer:
$25K @ 13.75%, 3 years, $286 payment A= p (1 + n/r)^nt
Question:
6. If $56K is the current loan balance and $550 the monthly payment, of which $130 applies towards
principal, what is the interest rate on this loan?
Answer:
Question:
7. An annuity can be defined as any
Answer:
is a contract between you and an insurance company in which you make a lump-sum payment or series of
payments and, in return, receive regular disbursements, beginning either immediately or at some point in
the future.
Question:
8. when mortgages are sold to investors, funds are circulated from
, Answer:
money-rich areas to money-poor areas.
Question:
9. what is the maximum tax-exempt gift that an investor can give to a recipient each year?
Answer:
$15,000
Question:
10. Under a lease with an option to buy, where the tenant has the right of first refusal, the
Answer:
With a lease option the tenant has an exclusive right to buy at a certain price for a period of time. The right
of first refusal just gives them the right to match the sellers best offer. In some cases they might be required
to pay a certain amount more.
Question:
11. which of the following benefits applies to the investor-landlord in a sale-leaseback?
Answer:
The advantage to the investor-landlord in this type of arrangement include a fair return ON and OF the
investment in the form of rental income during the lease term and ownership of a depreciable asset already
occupied by a "good" tenant. The investor is buying a guaranteed income stream that can be sheltered
through the proper use of allowable deductions.When determining the rent to be paid on the lease, the
investor can actually manage the risk by the amount of rent received.
Question:
12. under IRS rules, a foreclosure may result in a tax, burden for the burden for the defaulted borrower
when the
Answer:
Question:
13. under a deed of trust foreclosure, the borrower's ability to recover the property after the public auction
Answer:
Question:
14. the defaulting borrowers' ability to protect their property interests prior to a public auction is called
Answer:
Question:
15. when the proceeds from a foreclosure sale exceed the balance of the delinquent loan, the surplus
money goes to the
Answer:
Question:
16. A recorded notice of a foreclosure is called a
Answer:
