Exam (elaborations) Ree 3043

Economists suggest that the value of something results from its utility and:️️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:️️Urban economics Formals arrangements and associations that members of society make to support fundamental economics and social activities are referred to, in the text as️️institutions Marshal contended that in a perfect market, the value of a good️️Was equal to its price Commercial mortgages held in portfolios of lenders are generally referred to as️️Unsecuritized commercial mortgages Stocks,bonds, and cash are generally classified as️️Financial assets Real estate in the United States represents approximately what portion of the world's wealth?️️15 % Approximately __________ of the wealth of real estate in the U.S Accrues to residential property️️75% According to the text, business real estate (excluding farmland) accounts for approximately _____ percent of the total value of real estate in the U.S?️️15% The text organized to describe the following five perspectives of real estate️️-investment, market, valuation, mortgage finance, and legal T/F: Early economists concluded that land, labor, and credit were the resources of society that were combined by entrepreneurs to form useful products️️FALSE The resources combined to form useful products in society are land, labor, and capital. T/F: Alfred Marshall, an economist, argued that value results from the intersection of supply (cost) and demand (utility).️️True T/F: Urban economics constitutes a branch of economics that focuses on urban problems, especially housing issues.️️True T/F The fundamentals of supply and demand explain all aspects about individual and market behavior in valuing space.️️FALSE Much behavior is still unexplained due to the role of institutional arrangements, such as laws/ regulations. T/F: In addition to affecting market operations, lease contracts serve to formally identify a property's rent and the intersection of supply and demand️️True T/F: Real estate can be classified as both a financial asset and a real asset️️True T/F: Consistent with an open economy, most of the land in every state in the U.S. is privately owned.️️FALSE There are a few U.S. States that most of the land is owned by the government (Ex. Alaska) T/F: According to the text, real estate represents about one-half of the worlds wealth️️True T/F: Commercial real estate constitutes the most valuable component of the U.S real estate market️️False. Homeowners and residential mortgage lenders jointly own majority of U.S Real Estate T/F Commercial real estate owners carry more debt (as a percentage of the total property value) than residential property owners.️️false Effective Cost️️the true borrowing cost, including the effect of up-front financing costs Capitalization Rate️️calculated as expected cash flow in year one divided by the initial acquisition price, it is a measure of the current relationship between a property's income stream and price internal rate or return️️The discount rate which equates the present value of the cash inflows to the present value of the cash outflows Net Present Value️️The difference between the present value of the cash inflows and the present value of the cash outflows Investment Value️️the value of the property to a particular investor A property owner anticipates needing $25,000 in 10 years to replace the roof on a commercial building that he just purchased. If a 7% annual rate of interest can be earned on savings, how much does he needs to be saved each month?️️(First hit 2nd and then P/Y and enter 12 then clear to begin input) N= 10x12 = 120 I= 7% Pv= 0 Pmt= ? Fv= 25,000 Pmt= 144.44 An investor anticipates that land values for a site will be worth $200,000 in three years. If real estate taxes are expected to be $5,000 each year, how much can the investor pay today for the site and still earn a 12 percent return on his investment?️️(First hit 2nd and then P/Y and enter 1 then clear to begin inpuT ) N= 3 years I= 12% Pv= ? Pmt= -5,000 Fv= 200,000 Pv= 130,346.89 Calculate the monthly payment required to fully amortize over 30 years a $155