REE 4204 NEWEST 2024 COMPLETE QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES (VERIFIED ANSWERS) |ALREADY GRADED A+

REE 4204 NEWEST 2024 COMPLETE QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES (VERIFIED ANSWERS) |ALREADY GRADED A+ Why do interest rates matter? - ANSWER you want to pay the lowest rate you can because interest determines the payment you have. How are interest rates determined? - ANSWER real rate + inflation rate = interest rate What are some risks in real estate? - ANSWER default risk, interest rate risk, inflation risk What is a yield curve? - ANSWER relationship between interest rates on short term assets vs. long term assets. What is the market value? - ANSWER the average price the market is willing to pay for that asset What is financial leverage and why do you care about it? - ANSWER positive (favorable) leverage increases your rate of return What is a call option? - ANSWER the ability to pay off the loan early What is a put option? - ANSWER allows the borrower to put the property in place of the debt What is the function of an intermediary? - ANSWER it’s a 3rd party (mortgage lender) that helps argue a contract What is an efficient market? - ANSWER things being placed efficiently What kind of market is the real estate market? - ANSWER weak form efficiency Why was there little need for mortgage lending in the colonial US? - ANSWER people used to build their own cabins and they claimed land and homesteaded Why was financing needed for post-civil war expansion? - ANSWER they would sell their farms to move out west and they needed financing to buy a new farm What was real estate like in 1920's? - ANSWER a lot of real estate was built and financed, the economy boomed Why was the 1930's the most memorable period in US history? - ANSWER recession, half of the homes in the US were in default by 1933, property values plummeted How did the federal government respond to the events that took place in the 1930's? - ANSWER they created government jobs including FHLB, FSLIC, FHA, fannie mae What kept the US busy in the 1940's? - ANSWER WW2; gave people income and everyone is buying houses and cars and going to school. When was the modern subdivision created? - ANSWER 1940's, they were created to house the GI's and their families