CERTIFIED GENERAL APPRAISER
EXAM QUESTIONS AND ANSWERS
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 Answers -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 Answers -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 Answers -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 Answers -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 Answers -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 Answers -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 Answers -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 Answers –A
THE QUALITY OF A FORECAST FUTURE INCOME STREAM IS INDICATED BY ITS
A. AMOUNT
B. LENGTH
C. TIMING
D. MORTGAGE
E. RISK - Correct Answers -E
THE TOTAL ANTICIPATED REVENUE FROM INCOME PROPERTY OPERATIONS
AFTER VACANCY AND COLLECTION LOSSES ARE DEDUCTED IS
A. NET OPERATING INCOME
B. BEFORE-TAX CASH FLOW
C. EFFECTIVE GROSS INCOME
D. POTENTIAL GROSS INCOME
E. PROPERTY RESIDUAL INCOME - Correct Answers -C
WHICH OF THE FOLLOWING IS USED IN DIRECT CAPITALIZATION?
A. INTERNAL RATE OF RETURN
B. OVERALL CAPITALIZATION RATE
C. BUILDING CAPITALIZATION RATE
D. MORTGAGE CAPITALIZATION RATE
, E. EQUITY YEILD RATE - Correct Answers -B
WHICH OF THE FOLLOWING STATEMENTS IS TRUE?
A. IF THE OVERALL YIELD ON THE PROPERTY IS LESS THAN THE MORTGAGE
RATE, FAVORABLE LEVERAGE OCCURS.
B. WHEN NEGATIVE LEVERAGE OCCURS, THE OWNER RECEIVWS A CASH
YIELD ON THE PROPERTY THAT IS GREATER THAN IF THE PROPERTY WERE
NOT FINANCED.
C. IF THE OVERALL PROPERTY YIELD EQUALS THE MORTGAGE RATE, THE
OWNER RECEIVES AN ADDITIONAL YIELD ON HIS INVESTMENT BY TRADING ON
THE EQUITY.
D. FINANCING THE PROPERTY AT HIGHER RATES OF INTEREST THAN THE
OVERALL RATE MAY NOT BE BENEFICIAL TO THE OWNER IN TERMS OF YIELD
ON THE EUQITY INVESTMENT.
E. WHEN A PROPERTY GENERATES CASH FLOW, ITS OWNER PAYS TAX ON
THE MONEY RECEIVED. - Correct Answers -D
WHICH OF THE FOLLOWING STATEMENTS IS TRUE?
A. AN INVESTOR USUALLY CONSIDERS THE RETURN FROM A PROPERTY IN
THE LIGHT OF THE RISK BEING ASSUMED.
B. AN INVESTOR WHO ASSUMES HIGHER RISK USUALLY EXPECRS LOWER
INVESTMENT YIELD.
C. HIGHER-RISK INVESTMENTS ARE GENERALLY ASSOCIATED WITH LOWER
INVESTMENT RETURNS.
D. TO MAXIMIZE THE OVERALL RISK POSITION, THE INVESTOR MAY WISH TO
DIVERSIFY REAL AND /OR PERSONAL PROPERTY INVESTMENTS.
E. THE LOWEST-RISK INVESTMENT IS REAL ESTATE. - Correct Answers -A
CAPITALIZATION RATE IS
A. THE ANNUAL RENT DIVIDED BY THE PURCHAE PRICE
B. ANNUAL INCOME AND ALL GAINS OR LOSSES PRORATED TO AN EFFECTIVE
ANNUAL AMOUNT--AN INTERNAL RATE OF RETURN
C. THE PERCENTAGE OR DECIMAL RATE THAT, WHEN A LUMP-SUM CAPITAL
VALUE FOR THE INCOME
D. UNCHANGING WITH TIME
E. NONE OF THE ABOVE - Correct Answers -C
WHAT RATIO, EXPRESSED AS A PERCENTAGE, IS BETWEEN 80 AND 85?
A. IMPROVEMENT
B. OVERALL RATE
C. MORTGAGE CONSTANT
D. VACANCY
E. OPERATING EXPENSE - Correct Answers -A
WHAT RATEIO, EXPRESSED AS A PERCENTAGE, IS BETWEEN 10 AND 11?
A. IMPROVEMENT
EXAM QUESTIONS AND ANSWERS
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 Answers -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 Answers -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 Answers -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 Answers -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 Answers -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 Answers -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 Answers -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 Answers –A
THE QUALITY OF A FORECAST FUTURE INCOME STREAM IS INDICATED BY ITS
A. AMOUNT
B. LENGTH
C. TIMING
D. MORTGAGE
E. RISK - Correct Answers -E
THE TOTAL ANTICIPATED REVENUE FROM INCOME PROPERTY OPERATIONS
AFTER VACANCY AND COLLECTION LOSSES ARE DEDUCTED IS
A. NET OPERATING INCOME
B. BEFORE-TAX CASH FLOW
C. EFFECTIVE GROSS INCOME
D. POTENTIAL GROSS INCOME
E. PROPERTY RESIDUAL INCOME - Correct Answers -C
WHICH OF THE FOLLOWING IS USED IN DIRECT CAPITALIZATION?
A. INTERNAL RATE OF RETURN
B. OVERALL CAPITALIZATION RATE
C. BUILDING CAPITALIZATION RATE
D. MORTGAGE CAPITALIZATION RATE
, E. EQUITY YEILD RATE - Correct Answers -B
WHICH OF THE FOLLOWING STATEMENTS IS TRUE?
A. IF THE OVERALL YIELD ON THE PROPERTY IS LESS THAN THE MORTGAGE
RATE, FAVORABLE LEVERAGE OCCURS.
B. WHEN NEGATIVE LEVERAGE OCCURS, THE OWNER RECEIVWS A CASH
YIELD ON THE PROPERTY THAT IS GREATER THAN IF THE PROPERTY WERE
NOT FINANCED.
C. IF THE OVERALL PROPERTY YIELD EQUALS THE MORTGAGE RATE, THE
OWNER RECEIVES AN ADDITIONAL YIELD ON HIS INVESTMENT BY TRADING ON
THE EQUITY.
D. FINANCING THE PROPERTY AT HIGHER RATES OF INTEREST THAN THE
OVERALL RATE MAY NOT BE BENEFICIAL TO THE OWNER IN TERMS OF YIELD
ON THE EUQITY INVESTMENT.
E. WHEN A PROPERTY GENERATES CASH FLOW, ITS OWNER PAYS TAX ON
THE MONEY RECEIVED. - Correct Answers -D
WHICH OF THE FOLLOWING STATEMENTS IS TRUE?
A. AN INVESTOR USUALLY CONSIDERS THE RETURN FROM A PROPERTY IN
THE LIGHT OF THE RISK BEING ASSUMED.
B. AN INVESTOR WHO ASSUMES HIGHER RISK USUALLY EXPECRS LOWER
INVESTMENT YIELD.
C. HIGHER-RISK INVESTMENTS ARE GENERALLY ASSOCIATED WITH LOWER
INVESTMENT RETURNS.
D. TO MAXIMIZE THE OVERALL RISK POSITION, THE INVESTOR MAY WISH TO
DIVERSIFY REAL AND /OR PERSONAL PROPERTY INVESTMENTS.
E. THE LOWEST-RISK INVESTMENT IS REAL ESTATE. - Correct Answers -A
CAPITALIZATION RATE IS
A. THE ANNUAL RENT DIVIDED BY THE PURCHAE PRICE
B. ANNUAL INCOME AND ALL GAINS OR LOSSES PRORATED TO AN EFFECTIVE
ANNUAL AMOUNT--AN INTERNAL RATE OF RETURN
C. THE PERCENTAGE OR DECIMAL RATE THAT, WHEN A LUMP-SUM CAPITAL
VALUE FOR THE INCOME
D. UNCHANGING WITH TIME
E. NONE OF THE ABOVE - Correct Answers -C
WHAT RATIO, EXPRESSED AS A PERCENTAGE, IS BETWEEN 80 AND 85?
A. IMPROVEMENT
B. OVERALL RATE
C. MORTGAGE CONSTANT
D. VACANCY
E. OPERATING EXPENSE - Correct Answers -A
WHAT RATEIO, EXPRESSED AS A PERCENTAGE, IS BETWEEN 10 AND 11?
A. IMPROVEMENT
