REE 3043 Exam 1-2 FSU Woodyard
Questions with Guaranteed Pass
Solutions 2026 Updated.
Economists suggest that the value of something results from its utility and: - Answer scarcity
A branch of economics that extends the basic ideas of the early classical and neoclassical
economists to better understand and predict how humans use space is termed: - Answer
urban economics
Formal arrangements and associations that members of society make to support fundamental
economic and social activities are referred to, in the text, as: - Answer institutions
Marshall contended that in a perfect market, the value of a good - Answer was equal to its
price
Commercial mortgages held in the portfolios of lenders are generally referred to as: - Answer
unsecuritized commercial mortgages
Stocks, bonds and cash are generally classified as: - Answer financial assets
Real Estate in the United States represents approximately what portion of the world's wealth? -
Answer 15%
Approximately_________ of the wealth of real estate in the US accrues to residential property -
Answer 75%
According to the text, business real estate (excluding farmlands) accounts for approximately
_____ percent of the total value of real estate in the US? - Answer 15%
The text organized to describe the following five perspectives of real estate: - Answer
investment, market, valuation, mortgage finance, legal
T/F: Early economists concluded that land, labor, and credit were the resources of society that
were combined by entrepreneurs to form useful products - Answer False; land, labor and
capital
,T/F: Alfred Marshall, an economist, argued that value results from the intersection of supply
(cost) and demand (utility) - Answer True
T/F: Urban economics constitutes a branch of economics that focuses on urban problems,
especially housing issues - Answer True
T/F: The fundamentals of supply and demand explain all aspects about individual and market
behavior in valuing space - Answer False
T/F: In addition to affecting market operations, lease contracts serve to formally identify a
property's rent and the intersection of supply and demand - Answer True
T/F: Real estate can be classified as both a financial asset and a real asset - Answer True
T/F: Consistent with an open economy, most of the land in every state in the US is privately
owned - Answer False, Alaska is the exception
T/F: According to the text, real estate represents about one-half of the world's wealth - Answer
True
T/F: Commercial real estate constitutes the most valuable component of the US real estate
market - Answer False; residential
T/F: Commercial real estate owners carry more debt than residential property owners - Answer
False
T/F: Most investors are risk averse - Answer True
DEF: Financial Assets - Answer Claims to the income generated from the use of real assets.
DEF: Real Asset - Answer tangible things that have value because they are useful
DEF: Real Estate - Answer the collection of rights associated with real actions involving land
DEF: Real Property - Answer term used as a synonym for real estate, often mentioned to
describe legal rights in land
DEF: Rent - Answer price paid for the use of space
, Time-Value-of-Money - Answer understanding that individuals require compensation to
forego receiving and using their money at an earlier date
The application of the fixed mortgage payment to interest and principal is given on the: -
Answer Loan Amortization Schedule
Net Present Value - Answer cash inflows-cash outflows=NPV
The true borrowing cost, including the effect of up-front financing costs - Answer Effective
Cost
Calculated as expected cash flow in year one divided but the initial acquisition price, it is a
measure of the current relationship between a property's income stream and price - Answer
Capitalization rate
The discount rate which equates the present value of the cash inflows to the present value of
the cash outflows - Answer Internal rate of Return or IRR
The difference between the present value of cash inflows and the present value of the cash
outflows - Answer Net present value or NPV
The value of the property to a particular investor - Answer Investment Value
The price a typical buyer would pay should the property be placed on the market for sale -
Answer Market value
T/F: The value of income producing property depends on its expected cash flows, the timing of
those cash flows and the riskiness of the cash flows - Answer True
T/F: real estate investors earn returns on their investments from two basic components: income
from the rental of the property and the tax sheltering characteristics - Answer False; Rental
income and property appreciation
T/F: Investment "risk" is defined as the probability that actual cash flows will differ from what
was expected - Answer True
T/F: Most real estate investors are risk seekers rather than risk averse - Answer false; risk
averse
Questions with Guaranteed Pass
Solutions 2026 Updated.
Economists suggest that the value of something results from its utility and: - Answer scarcity
A branch of economics that extends the basic ideas of the early classical and neoclassical
economists to better understand and predict how humans use space is termed: - Answer
urban economics
Formal arrangements and associations that members of society make to support fundamental
economic and social activities are referred to, in the text, as: - Answer institutions
Marshall contended that in a perfect market, the value of a good - Answer was equal to its
price
Commercial mortgages held in the portfolios of lenders are generally referred to as: - Answer
unsecuritized commercial mortgages
Stocks, bonds and cash are generally classified as: - Answer financial assets
Real Estate in the United States represents approximately what portion of the world's wealth? -
Answer 15%
Approximately_________ of the wealth of real estate in the US accrues to residential property -
Answer 75%
According to the text, business real estate (excluding farmlands) accounts for approximately
_____ percent of the total value of real estate in the US? - Answer 15%
The text organized to describe the following five perspectives of real estate: - Answer
investment, market, valuation, mortgage finance, legal
T/F: Early economists concluded that land, labor, and credit were the resources of society that
were combined by entrepreneurs to form useful products - Answer False; land, labor and
capital
,T/F: Alfred Marshall, an economist, argued that value results from the intersection of supply
(cost) and demand (utility) - Answer True
T/F: Urban economics constitutes a branch of economics that focuses on urban problems,
especially housing issues - Answer True
T/F: The fundamentals of supply and demand explain all aspects about individual and market
behavior in valuing space - Answer False
T/F: In addition to affecting market operations, lease contracts serve to formally identify a
property's rent and the intersection of supply and demand - Answer True
T/F: Real estate can be classified as both a financial asset and a real asset - Answer True
T/F: Consistent with an open economy, most of the land in every state in the US is privately
owned - Answer False, Alaska is the exception
T/F: According to the text, real estate represents about one-half of the world's wealth - Answer
True
T/F: Commercial real estate constitutes the most valuable component of the US real estate
market - Answer False; residential
T/F: Commercial real estate owners carry more debt than residential property owners - Answer
False
T/F: Most investors are risk averse - Answer True
DEF: Financial Assets - Answer Claims to the income generated from the use of real assets.
DEF: Real Asset - Answer tangible things that have value because they are useful
DEF: Real Estate - Answer the collection of rights associated with real actions involving land
DEF: Real Property - Answer term used as a synonym for real estate, often mentioned to
describe legal rights in land
DEF: Rent - Answer price paid for the use of space
, Time-Value-of-Money - Answer understanding that individuals require compensation to
forego receiving and using their money at an earlier date
The application of the fixed mortgage payment to interest and principal is given on the: -
Answer Loan Amortization Schedule
Net Present Value - Answer cash inflows-cash outflows=NPV
The true borrowing cost, including the effect of up-front financing costs - Answer Effective
Cost
Calculated as expected cash flow in year one divided but the initial acquisition price, it is a
measure of the current relationship between a property's income stream and price - Answer
Capitalization rate
The discount rate which equates the present value of the cash inflows to the present value of
the cash outflows - Answer Internal rate of Return or IRR
The difference between the present value of cash inflows and the present value of the cash
outflows - Answer Net present value or NPV
The value of the property to a particular investor - Answer Investment Value
The price a typical buyer would pay should the property be placed on the market for sale -
Answer Market value
T/F: The value of income producing property depends on its expected cash flows, the timing of
those cash flows and the riskiness of the cash flows - Answer True
T/F: real estate investors earn returns on their investments from two basic components: income
from the rental of the property and the tax sheltering characteristics - Answer False; Rental
income and property appreciation
T/F: Investment "risk" is defined as the probability that actual cash flows will differ from what
was expected - Answer True
T/F: Most real estate investors are risk seekers rather than risk averse - Answer false; risk
averse
