IAAO 112|100 QUESTIONS EXAM 2024 |
ACTUAL EXAM WITH A STUDY GUIDE AND
PRACTICE EXAM | ACCURATE REAL EXAM
QUESTIONS AND ANSWERS |
GUARANTEED PASS | LATEST UPDATE |
GRADED A
Potential Gross Income - ✔✔ANSW✔✔..Annual gross income
Market rent - ✔✔ANSW✔✔..The rental income a property would most probably
command in the open market
Balance - ✔✔ANSW✔✔..The principle that real property value is created and sustained
when contrasting, opposing, or interacting elements are in a state of equilibrium. (Value
is maximized when the 4 agents of production are in their proper allocation.)
Conformity - ✔✔ANSW✔✔..States that overall,the prices of an area will be maximized if
structures are conforming
Discount rate - ✔✔ANSW✔✔..Interest rate used to convert future payments or receipts
into a present value.
Safe rate - ✔✔ANSW✔✔..Under discount rate. Base rate on the safest investments
such as government insured investments.
Risk rate - ✔✔ANSW✔✔..Under discount rate. An amount in addition to the safe rate,
which compensates the investor for the degree of risk in the investment.
Rate for non liquidity - ✔✔ANSW✔✔..Amount in addition to the safe rate and risk rate
which compensates the investor for the time necessary to convert the real estate into
cash.
Rate for management/management of investment rate - ✔✔ANSW✔✔..Under discount
rate. Amount in addition to the safe, risk, and non liquidity rates which compensates the
investor for the decision making process to manage the real estate investment.
, Interest rate - ✔✔ANSW✔✔..Price of money; level of market interest carried by a debt
instrument from the day it was created over the duration of its life.
Overall capitalization rate Ro - ✔✔ANSW✔✔..Income rate for a total real property
interest that reflects the relationship between a single year's noi expectancy and total
property price or value. Used to convert noi to and indication of overall property value.
Property yield - ✔✔ANSW✔✔..Dollar return on the entire real property from all sources.
Yield rate/discount rate - ✔✔ANSW✔✔..Rate of return on capital/real estate investment,
usually expressed as a compound annual percentage rate.
Yield to maturity - ✔✔ANSW✔✔..Total rate of return that would be realized on an
investment such as bond if purchased at the current market price, held as an
investment, and redeemed for the principle amount at maturity.
Yield capitalization - ✔✔ANSW✔✔..Used to convert future benefits into present value
by discounting each future benefit at an appropriate yield rate or by developing an
overall rate that explicitly reflects the investments income pattern, value change, and
yield rate.
Equity yield rate Ye - ✔✔ANSW✔✔..Rate of return on equity capital as distinguished
from the rate of return on debt capital. Considers the effect of debt financing on the cash
flow to the equity investor.
Recapture rate - ✔✔ANSW✔✔..Annual rate at which invested capital is returned to the
investor over a specified period. Same as depreciation rate for the improvement. Takes
into consideration the remaining economic life of the improvement.
Effective tax rate ETR - ✔✔ANSW✔✔..Reflects relationship between the real estate
taxes and the value of the property. The tax rate expressed as a percentage of market
value. Calculated by EAT formula or by dividing the taxes by market value.
Effective Gross Income Multiplier EGIM - ✔✔ANSW✔✔..Sale price \ effective gross
Net operating income multiplier NOIM - ✔✔ANSW✔✔..Sale price /net income
Progression - ✔✔ANSW✔✔..(Under conformity) Is the concept that the value of an
inferior property is enhanced by its association with better properties.
ACTUAL EXAM WITH A STUDY GUIDE AND
PRACTICE EXAM | ACCURATE REAL EXAM
QUESTIONS AND ANSWERS |
GUARANTEED PASS | LATEST UPDATE |
GRADED A
Potential Gross Income - ✔✔ANSW✔✔..Annual gross income
Market rent - ✔✔ANSW✔✔..The rental income a property would most probably
command in the open market
Balance - ✔✔ANSW✔✔..The principle that real property value is created and sustained
when contrasting, opposing, or interacting elements are in a state of equilibrium. (Value
is maximized when the 4 agents of production are in their proper allocation.)
Conformity - ✔✔ANSW✔✔..States that overall,the prices of an area will be maximized if
structures are conforming
Discount rate - ✔✔ANSW✔✔..Interest rate used to convert future payments or receipts
into a present value.
Safe rate - ✔✔ANSW✔✔..Under discount rate. Base rate on the safest investments
such as government insured investments.
Risk rate - ✔✔ANSW✔✔..Under discount rate. An amount in addition to the safe rate,
which compensates the investor for the degree of risk in the investment.
Rate for non liquidity - ✔✔ANSW✔✔..Amount in addition to the safe rate and risk rate
which compensates the investor for the time necessary to convert the real estate into
cash.
Rate for management/management of investment rate - ✔✔ANSW✔✔..Under discount
rate. Amount in addition to the safe, risk, and non liquidity rates which compensates the
investor for the decision making process to manage the real estate investment.
, Interest rate - ✔✔ANSW✔✔..Price of money; level of market interest carried by a debt
instrument from the day it was created over the duration of its life.
Overall capitalization rate Ro - ✔✔ANSW✔✔..Income rate for a total real property
interest that reflects the relationship between a single year's noi expectancy and total
property price or value. Used to convert noi to and indication of overall property value.
Property yield - ✔✔ANSW✔✔..Dollar return on the entire real property from all sources.
Yield rate/discount rate - ✔✔ANSW✔✔..Rate of return on capital/real estate investment,
usually expressed as a compound annual percentage rate.
Yield to maturity - ✔✔ANSW✔✔..Total rate of return that would be realized on an
investment such as bond if purchased at the current market price, held as an
investment, and redeemed for the principle amount at maturity.
Yield capitalization - ✔✔ANSW✔✔..Used to convert future benefits into present value
by discounting each future benefit at an appropriate yield rate or by developing an
overall rate that explicitly reflects the investments income pattern, value change, and
yield rate.
Equity yield rate Ye - ✔✔ANSW✔✔..Rate of return on equity capital as distinguished
from the rate of return on debt capital. Considers the effect of debt financing on the cash
flow to the equity investor.
Recapture rate - ✔✔ANSW✔✔..Annual rate at which invested capital is returned to the
investor over a specified period. Same as depreciation rate for the improvement. Takes
into consideration the remaining economic life of the improvement.
Effective tax rate ETR - ✔✔ANSW✔✔..Reflects relationship between the real estate
taxes and the value of the property. The tax rate expressed as a percentage of market
value. Calculated by EAT formula or by dividing the taxes by market value.
Effective Gross Income Multiplier EGIM - ✔✔ANSW✔✔..Sale price \ effective gross
Net operating income multiplier NOIM - ✔✔ANSW✔✔..Sale price /net income
Progression - ✔✔ANSW✔✔..(Under conformity) Is the concept that the value of an
inferior property is enhanced by its association with better properties.
