REAL ESTATE FINANCE, FINAL EXAM 2 (EDITION 9)
2025/2026 UPDATE QUESTIONS WITH COMPLETE
SOLUTION, GRADED A+
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%
All of the following inputs are needed to estimate a break-even point except
Answer - discount rate
In figuring a break-even analysis, which of the following items are fixed
expenses? Answer - utility costs
The yearly principal and interest amounts required to amortize a debt is called
the Answer - loan constant
which of the following arrangements is an interest-only loan? Answer - $25K @
13.75%, 3 years, $286 payment
A= p (1 + n/r)^nt
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 -
, 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.
when mortgages are sold to investors, funds are circulated from Answer -
money-rich areas to money-poor areas.
what is the maximum tax-exempt gift that an investor can give to a recipient
each year? Answer - $15,000
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.
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.
under IRS rules, a foreclosure may result in a tax, burden for the burden for the
defaulted borrower when the Answer -
under a deed of trust foreclosure, the borrower's ability to recover the
property after the public auction Answer -
2025/2026 UPDATE QUESTIONS WITH COMPLETE
SOLUTION, GRADED A+
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%
All of the following inputs are needed to estimate a break-even point except
Answer - discount rate
In figuring a break-even analysis, which of the following items are fixed
expenses? Answer - utility costs
The yearly principal and interest amounts required to amortize a debt is called
the Answer - loan constant
which of the following arrangements is an interest-only loan? Answer - $25K @
13.75%, 3 years, $286 payment
A= p (1 + n/r)^nt
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 -
, 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.
when mortgages are sold to investors, funds are circulated from Answer -
money-rich areas to money-poor areas.
what is the maximum tax-exempt gift that an investor can give to a recipient
each year? Answer - $15,000
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.
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.
under IRS rules, a foreclosure may result in a tax, burden for the burden for the
defaulted borrower when the Answer -
under a deed of trust foreclosure, the borrower's ability to recover the
property after the public auction Answer -
