REE4204 EXAM PREP ALREADY PASSED
Real estate finance - =of institutions, markets, and instruments used to transfer money and credit
for the purpose of developing or acquiring real property
True - =In general, inflation is a monetary phenomenon resulting from an increase in money
supply as opposed to resulting from an increase in general price levels.
True - =According to the liquidity premium theory, investors are willing to pay a price premium
for securities with shorter maturities.
False - =For most investments, cash flow and net profit can be used interchangeably in asset
valuation.
False - =Commercial banks are overseen by the Office of Thrift Supervision.
True - =Since finance is concerned with the valuation of assets, it must explicitly consider the
time value of money.
True - =Real Estate investment Trusts (REITs) specialize in investing in real property and
mortgages on real property.
False - =The secondary mortgage market is the market where second (junior) mortgages are
created.
False - =Since the nominal interest rate can be observed in the market, a precise measure of
future inflation can be determined.
False - =A yield curve shows the yields on bonds over time.
False - =In today's mortgage market, due to the short-term nature of mortgages, most real estate
financing takes place in the money markets.
, False - =The benefit to the investor of the call provision in a callable bond increases as the
market interest rate falls further below the rate offered on the bond.
False - =The market segmentation theory suggests that there is more than one market for the
same security.
False - =A downward sloping yield curve shows that, at this point in time, long-term rates are
higher than short-term rates.
True - =The price of a bond, besides being determined by the market-required rate, also moves
inversely to this rate.
False
8% - =Under the expectations theory, observed rates on current one-year and two-year bonds of
4% and 6%, respectively, indicate that the one-year bond rate one year from now will be between
4% and 6%.
True - =Under the expectations theory, an upwards sloping yield curve means that investors
expect market rates to rise in the future.
False - =The market segmentation theory by its nature dictates that short term rates must always
be less than long term rates.
True - =Default risk is the risk that a bond issuer will be unable to repay the principal and
interest on the debt.
True - =The yield observed on a riskless bond in a non-inflationary environment would be the
real rate of interest.
True - =A primary market transaction always involves the original issuer of the security.
Real estate finance - =of institutions, markets, and instruments used to transfer money and credit
for the purpose of developing or acquiring real property
True - =In general, inflation is a monetary phenomenon resulting from an increase in money
supply as opposed to resulting from an increase in general price levels.
True - =According to the liquidity premium theory, investors are willing to pay a price premium
for securities with shorter maturities.
False - =For most investments, cash flow and net profit can be used interchangeably in asset
valuation.
False - =Commercial banks are overseen by the Office of Thrift Supervision.
True - =Since finance is concerned with the valuation of assets, it must explicitly consider the
time value of money.
True - =Real Estate investment Trusts (REITs) specialize in investing in real property and
mortgages on real property.
False - =The secondary mortgage market is the market where second (junior) mortgages are
created.
False - =Since the nominal interest rate can be observed in the market, a precise measure of
future inflation can be determined.
False - =A yield curve shows the yields on bonds over time.
False - =In today's mortgage market, due to the short-term nature of mortgages, most real estate
financing takes place in the money markets.
, False - =The benefit to the investor of the call provision in a callable bond increases as the
market interest rate falls further below the rate offered on the bond.
False - =The market segmentation theory suggests that there is more than one market for the
same security.
False - =A downward sloping yield curve shows that, at this point in time, long-term rates are
higher than short-term rates.
True - =The price of a bond, besides being determined by the market-required rate, also moves
inversely to this rate.
False
8% - =Under the expectations theory, observed rates on current one-year and two-year bonds of
4% and 6%, respectively, indicate that the one-year bond rate one year from now will be between
4% and 6%.
True - =Under the expectations theory, an upwards sloping yield curve means that investors
expect market rates to rise in the future.
False - =The market segmentation theory by its nature dictates that short term rates must always
be less than long term rates.
True - =Default risk is the risk that a bond issuer will be unable to repay the principal and
interest on the debt.
True - =The yield observed on a riskless bond in a non-inflationary environment would be the
real rate of interest.
True - =A primary market transaction always involves the original issuer of the security.
