Official Summer 2025 Pearson Edexcel GCSE
1BS0/01 In Business (1BS0) Paper 01 Investigating
small business Merged Question and Correct
Answers With Rationale A+ GRADE
__________________________________________________________
John Doe is trying to rent a bedroom in his house. A Latin American applies and is told by
the owner (Doe), "I will only rent to a Caucasian." Which law has John violated, if any?
Select one:
A. 1968 Fair Housing Law
B. Civil Rights Act of 1988
C. Civil Rights Act of 1964
D. None of the above
The correct answer is: 1968 Fair Housing Law
(fair housing laws) While owner/sellers are exempt from the 1968 Federal Fair Housing Law,
they may not make, print, or publish a discriminatory statement which indicates any
preference or limitation.
Which of the following items is NOT a latent defect?
Select one:
A. Worn carpeting
B. Seasonal flooding in the basement
C. A foundation crack covered with paneling
D. A faulty, but working, heating system
(material facts) A latent defect is one that is not readily noticeable. Worn carpets are
obvious, while the other answer choices would probably not be known by mere
observation.
The correct answer is: Worn carpeting
,Encouraging a homeowner to sell his or her property because minority group families are
moving into the neighborhood is:
Select one:
A. Redlining
B. Steering
C. Blockbusting
D. Puffery
(fair housing laws) This is a textbook example of blockbusting.
The correct answer is: Blockbusting
A salesperson listed a property where a murder recently occurred. If the salesperson
shows the property without advising potential buyers of the murders, the salesperson
would be guilty of:
Select one:
A. Fraud
B. Misrepresentation
C. Puffery
D. Nothing
(material facts) The salesperson is not required to disclose occurrences which have no effect
on the physical structure, the environment, the property, or its improvements.
The correct answer is: Nothing
Two brothers own separate real estate companies, but agree to divide their received
commissions equally. Broker A pays for three-fourths of the advertising costs and finds
the buyer. Broker B pays for one-fourth of the advertising costs. If the total commission on
the sale is $4,500, how much does Broker B receive?
Select one:
A. $1,125
B. $2,250
C. $4,500
D. None of the above
,(commission and fees) Since the brokers agree to divide the commission equally, each gets
$2,250 despite their individual expenses. Do not be fooled into making this question more
complicated than it is.
The correct answer is: $2,250
Private Mortgage Insurance (PMI) covers which portion of a loan?
Select one:
A. Top 10% of the loan
B. Top 20% of the loan
C. Top 30% of the loan
D. One-half of the loan
Feedback
(sources of loan money) When a lender lends more than the established loan to value ratio
(usually 80% LTV), the lender may require insurance to cover the amount of the loan over
and above the standard rate. For example, lenders could choose to lend as much as 95% of
the property value. In these situations, the general rule is that PMI covers the top 20-25% of
the loan.
The correct answer is: Top 20% of the loan
If a prospective minority buyer asks an agent to show her properties, the agent should:
Select one:
A. Show her properties in areas that are predominantly of the same minority group
B. Refer her to an agent with the same race or ethnicity
C. Advise her that the firm does not handle people of her minority group, and refer her to
another brokerage
D. Show her any property for which she is financially qualified
(fair housing laws) All of these choices describe violations of Fair Housing Laws, except
showing property that a person is financially qualified to purchase.
The correct answer is: Show her any property for which she is financially qualified
Which of the following amounts is NOT prorated between buyer and seller at closing?
Select one:
A. Recording fees
, B. Real estate taxes
C. Rents
D. Homeowner's insurance premiums
Feedback
(tax aspects) Recording fees are NOT prorated; each party pays his own. If insurance
premiums have been paid in advance by the seller, they would be prorated if the buyer
assumes the insurance policy. However, this is not as common a practice as it once was.
The correct answer is: Recording fees
Mrs. O'Leary has owned her house, free and clear, for several years. She has a fixed
income and would like to take some of the equity out of her property. She would most
likely apply for which type of loan?
Select one:
A. GPM
B. RAM
C. SAM
D. GRM
Feedback
(mortgages/deeds of trust) A RAM is a reverse annuity mortgage. The lender would send a
specified amount every month to Mrs. O'Leary, expecting to be repaid when the property is
sold.
The correct answer is: RAM
What is the first step in the appraisal process?
Select one:
A. Locate comparables
B. Do a correlation study
C. Physically inspect the property in order to gather data
D. Determine the purpose of the appraisal
Feedback
(methods of estimating value) There are six (6) steps of the appraisal process. Defining the
problem (determining the purpose of the appraisal) is the first step in any appraisal process.
1BS0/01 In Business (1BS0) Paper 01 Investigating
small business Merged Question and Correct
Answers With Rationale A+ GRADE
__________________________________________________________
John Doe is trying to rent a bedroom in his house. A Latin American applies and is told by
the owner (Doe), "I will only rent to a Caucasian." Which law has John violated, if any?
Select one:
A. 1968 Fair Housing Law
B. Civil Rights Act of 1988
C. Civil Rights Act of 1964
D. None of the above
The correct answer is: 1968 Fair Housing Law
(fair housing laws) While owner/sellers are exempt from the 1968 Federal Fair Housing Law,
they may not make, print, or publish a discriminatory statement which indicates any
preference or limitation.
Which of the following items is NOT a latent defect?
Select one:
A. Worn carpeting
B. Seasonal flooding in the basement
C. A foundation crack covered with paneling
D. A faulty, but working, heating system
(material facts) A latent defect is one that is not readily noticeable. Worn carpets are
obvious, while the other answer choices would probably not be known by mere
observation.
The correct answer is: Worn carpeting
,Encouraging a homeowner to sell his or her property because minority group families are
moving into the neighborhood is:
Select one:
A. Redlining
B. Steering
C. Blockbusting
D. Puffery
(fair housing laws) This is a textbook example of blockbusting.
The correct answer is: Blockbusting
A salesperson listed a property where a murder recently occurred. If the salesperson
shows the property without advising potential buyers of the murders, the salesperson
would be guilty of:
Select one:
A. Fraud
B. Misrepresentation
C. Puffery
D. Nothing
(material facts) The salesperson is not required to disclose occurrences which have no effect
on the physical structure, the environment, the property, or its improvements.
The correct answer is: Nothing
Two brothers own separate real estate companies, but agree to divide their received
commissions equally. Broker A pays for three-fourths of the advertising costs and finds
the buyer. Broker B pays for one-fourth of the advertising costs. If the total commission on
the sale is $4,500, how much does Broker B receive?
Select one:
A. $1,125
B. $2,250
C. $4,500
D. None of the above
,(commission and fees) Since the brokers agree to divide the commission equally, each gets
$2,250 despite their individual expenses. Do not be fooled into making this question more
complicated than it is.
The correct answer is: $2,250
Private Mortgage Insurance (PMI) covers which portion of a loan?
Select one:
A. Top 10% of the loan
B. Top 20% of the loan
C. Top 30% of the loan
D. One-half of the loan
Feedback
(sources of loan money) When a lender lends more than the established loan to value ratio
(usually 80% LTV), the lender may require insurance to cover the amount of the loan over
and above the standard rate. For example, lenders could choose to lend as much as 95% of
the property value. In these situations, the general rule is that PMI covers the top 20-25% of
the loan.
The correct answer is: Top 20% of the loan
If a prospective minority buyer asks an agent to show her properties, the agent should:
Select one:
A. Show her properties in areas that are predominantly of the same minority group
B. Refer her to an agent with the same race or ethnicity
C. Advise her that the firm does not handle people of her minority group, and refer her to
another brokerage
D. Show her any property for which she is financially qualified
(fair housing laws) All of these choices describe violations of Fair Housing Laws, except
showing property that a person is financially qualified to purchase.
The correct answer is: Show her any property for which she is financially qualified
Which of the following amounts is NOT prorated between buyer and seller at closing?
Select one:
A. Recording fees
, B. Real estate taxes
C. Rents
D. Homeowner's insurance premiums
Feedback
(tax aspects) Recording fees are NOT prorated; each party pays his own. If insurance
premiums have been paid in advance by the seller, they would be prorated if the buyer
assumes the insurance policy. However, this is not as common a practice as it once was.
The correct answer is: Recording fees
Mrs. O'Leary has owned her house, free and clear, for several years. She has a fixed
income and would like to take some of the equity out of her property. She would most
likely apply for which type of loan?
Select one:
A. GPM
B. RAM
C. SAM
D. GRM
Feedback
(mortgages/deeds of trust) A RAM is a reverse annuity mortgage. The lender would send a
specified amount every month to Mrs. O'Leary, expecting to be repaid when the property is
sold.
The correct answer is: RAM
What is the first step in the appraisal process?
Select one:
A. Locate comparables
B. Do a correlation study
C. Physically inspect the property in order to gather data
D. Determine the purpose of the appraisal
Feedback
(methods of estimating value) There are six (6) steps of the appraisal process. Defining the
problem (determining the purpose of the appraisal) is the first step in any appraisal process.
