Real Estate Finance Exam #1 Questions And Answers 100% Correct!

Real Estate Finance - ANSWERSThe study of the institutions, markets and instruments used to transfer money and credit for the purpose of developing or acquiring real property. Real Property - ANSWERSThe rights, power, and privileges associated with the use of real estate. Real Estate - ANSWERSLand and all fixed immovable improvements on it. Financial Instruments - ANSWERSAre used to transfer money and credit for the purpose of developing and acquiring real property .Environment of Real Estate Finance - ANSWERSThe institutions that create and purchase those instruments and the markets in which they are traded constitute the? Cost, Risk, and Yield - ANSWERSThe three unifying factors which drive all rational financial decisions. Borrowing Costs - ANSWERSA critical factor in determining the supply side of the real estate supply and demand equation. Passive Investors - ANSWERSInvestor type which puts money at risk and has no control. Active Investors - ANSWERSInvestor type which makes decisions that influence an investments return. Debt Position - ANSWERSThe position in which an investor lends money and expects to recover principle and interest. Equity Investors - ANSWERSInvestors who acquire an actual ownership interest in real estate assets. Financial Intermediaries - ANSWERSFinancial Institutions who facilitate the flow of funds from the surplus income (savers) units to the deficit Income (borrowers) units. Commercial Banks - ANSWERSInstitutions accepting demand (checking) and time (CDs & Savings) deposits. Thrift Institutions - ANSWERSSavings and Loan institutions; mutual savings banks; credit unions (the main difference in these are the types of ownership) Investment Companies - ANSWERSThese pool the funds of savers and invest the funds in a portfolio of assets. Insurance Companies - ANSWERSThese receive periodic, lump sum payments from individuals or organizations in exchange for a promise to make future payments if certain events occur. Pension Funds - ANSWERSThese pool the contributions of employees and invest the funds similarly to insurance companies. 1970 - ANSWERSAlternative mortgage instruments were introduced after what year? Economic Recovery Tax Act of 1981 - ANSWERSThe act congress passed in the 80s that majorly increased tax incentives for investing in real estate. Commercial Mortgage Backed Securities - ANSWERSThe method of conduit financing wildly popular in the 90s. Primary Mortgage Market - ANSWERSThe market where loans are originated. Primary Market - ANSWERSWho holds the risk if the mortgage cannot be sold in the secondary market? Secondary Market - ANSWERSThe market where existing mortgages are bought and sold. Liquid - ANSWERSA large or active secondary market makes securities more?