Texas Principles of Real Estate II Exam
Questions With Correct Answers
Mixed Numbers - correct answer(s) ✔✔ A number containing both a whole number and a
fraction (examples: 1⅓; 9⅞)
Improper Fractions - correct answer(s) ✔✔ a fraction with its numerator equal to or greater
than its denominator
Commission Calculation - correct answer(s) ✔✔ Sales price X rate of commission = total
commission
Solving for the Commission Rate - correct answer(s) ✔✔ Commission Rate = Commission ÷
Price
Solving for the Property's Price - correct answer(s) ✔✔ Price = Commission ÷ Commission Rate
Profit - correct answer(s) ✔✔ Profit (or Loss) = Selling price - Original cost
Profit Percentage - correct answer(s) ✔✔ Percentage of profit = Profit ÷ Original cost
Profit Margin - correct answer(s) ✔✔ Profit margin = Profit ÷ Selling price
Interest - correct answer(s) ✔✔ the price paid for the use of borrowed money
,3 types of interest calculations - correct answer(s) ✔✔ Simple interest, add-on interest, and
compound interest
Simple interest - correct answer(s) ✔✔ Interest = principal x rate x time
Add-on interest - correct answer(s) ✔✔ loan amount x contracted interest rate x number of
payments
Add-on interest APR - correct answer(s) ✔✔ APR = 2 x number of payment periods in one year
x total financing charges ÷ (principal, or amount borrowed x (number of scheduled payments
+1)
Compound interest - correct answer(s) ✔✔ interest which is computed on the principal
amount plus the accrued interest.
Compound Interest Formula - correct answer(s) ✔✔ Compound amount = Initial deposit (1 +
Interest rate)n
Points - correct answer(s) ✔✔ a one-time service charge to the borrower for making the loan
Two types of points - correct answer(s) ✔✔ origination fee and discount points
Loan-to-Value Ratio (LTV) - correct answer(s) ✔✔ expresses the relationship between a
property's purchase price and its loan amount.
Loan-to-Value formula - correct answer(s) ✔✔ LTV ratio = (Loan amount ÷ Value)
,Area of a rectangle - correct answer(s) ✔✔ Area = length x width
Area of a square - correct answer(s) ✔✔ Area = side x side
Area of a triangle - correct answer(s) ✔✔ Area = ½ base x height
Perimeter - correct answer(s) ✔✔ a lot or other shape is the sum of the length of all its sides.
Acre - correct answer(s) ✔✔ A measure of land equal to 43,560 square feet.
Hectare - correct answer(s) ✔✔ is equal to 10,000 square meters or approximately 2.47 acres.
To convert acres to hectares - correct answer(s) ✔✔ divide the total acres by 2.47
Appraisal - correct answer(s) ✔✔ is an unbiased estimate of the nature, quality, value or
utility of an interest in or aspect of identified real estate and related personalty as of a certain
date.
Specific data - correct answer(s) ✔✔ This is information and details about the subject
property, as well as data (used for comparison) about comparable properties' costs, income
and expenses, sales and other relevant information
General data - correct answer(s) ✔✔ This is information about the property's location - its
country, region, city, and, most importantly, its neighborhood
Steps in Appraisal Process - correct answer(s) ✔✔ 1. Define problem and scope of work
2. Collect, record, and verify the required data
, 3. Determine the property's highest and best use
4. Estimate the land value
5. Use ALL THREE approaches to estimate value
6. Reconcile the estimated values to determine the final value estimate
7. Communicate the final value estimate
Highest and Best Use - correct answer(s) ✔✔ Legally permissible
Physically possible
Financially feasible
Maximally productive
Describe the difference between specific and general data - correct answer(s) ✔✔ Specific
data is information and details about the subject property and the comparables.
General data is information about the property's location - its country, region, city, and
neighborhood.
Direct sales comparison - correct answer(s) ✔✔ sales of comparable vacant parcels are
analyzed and adjusted to indicate a value for the subject land
Allocation - correct answer(s) ✔✔ a typical ratio of land value to total value is derived from
comparable properties and applied to the subject
Extraction - correct answer(s) ✔✔ land value is estimated by deducting the depreciated cost
of improvements on a property from the total sale price of the property.
Subdivision development analysis - correct answer(s) ✔✔ costs and profit are deducted from
estimated gross sale prices of subdivided and finished lots, and net sales proceeds are
discounted to present value
Questions With Correct Answers
Mixed Numbers - correct answer(s) ✔✔ A number containing both a whole number and a
fraction (examples: 1⅓; 9⅞)
Improper Fractions - correct answer(s) ✔✔ a fraction with its numerator equal to or greater
than its denominator
Commission Calculation - correct answer(s) ✔✔ Sales price X rate of commission = total
commission
Solving for the Commission Rate - correct answer(s) ✔✔ Commission Rate = Commission ÷
Price
Solving for the Property's Price - correct answer(s) ✔✔ Price = Commission ÷ Commission Rate
Profit - correct answer(s) ✔✔ Profit (or Loss) = Selling price - Original cost
Profit Percentage - correct answer(s) ✔✔ Percentage of profit = Profit ÷ Original cost
Profit Margin - correct answer(s) ✔✔ Profit margin = Profit ÷ Selling price
Interest - correct answer(s) ✔✔ the price paid for the use of borrowed money
,3 types of interest calculations - correct answer(s) ✔✔ Simple interest, add-on interest, and
compound interest
Simple interest - correct answer(s) ✔✔ Interest = principal x rate x time
Add-on interest - correct answer(s) ✔✔ loan amount x contracted interest rate x number of
payments
Add-on interest APR - correct answer(s) ✔✔ APR = 2 x number of payment periods in one year
x total financing charges ÷ (principal, or amount borrowed x (number of scheduled payments
+1)
Compound interest - correct answer(s) ✔✔ interest which is computed on the principal
amount plus the accrued interest.
Compound Interest Formula - correct answer(s) ✔✔ Compound amount = Initial deposit (1 +
Interest rate)n
Points - correct answer(s) ✔✔ a one-time service charge to the borrower for making the loan
Two types of points - correct answer(s) ✔✔ origination fee and discount points
Loan-to-Value Ratio (LTV) - correct answer(s) ✔✔ expresses the relationship between a
property's purchase price and its loan amount.
Loan-to-Value formula - correct answer(s) ✔✔ LTV ratio = (Loan amount ÷ Value)
,Area of a rectangle - correct answer(s) ✔✔ Area = length x width
Area of a square - correct answer(s) ✔✔ Area = side x side
Area of a triangle - correct answer(s) ✔✔ Area = ½ base x height
Perimeter - correct answer(s) ✔✔ a lot or other shape is the sum of the length of all its sides.
Acre - correct answer(s) ✔✔ A measure of land equal to 43,560 square feet.
Hectare - correct answer(s) ✔✔ is equal to 10,000 square meters or approximately 2.47 acres.
To convert acres to hectares - correct answer(s) ✔✔ divide the total acres by 2.47
Appraisal - correct answer(s) ✔✔ is an unbiased estimate of the nature, quality, value or
utility of an interest in or aspect of identified real estate and related personalty as of a certain
date.
Specific data - correct answer(s) ✔✔ This is information and details about the subject
property, as well as data (used for comparison) about comparable properties' costs, income
and expenses, sales and other relevant information
General data - correct answer(s) ✔✔ This is information about the property's location - its
country, region, city, and, most importantly, its neighborhood
Steps in Appraisal Process - correct answer(s) ✔✔ 1. Define problem and scope of work
2. Collect, record, and verify the required data
, 3. Determine the property's highest and best use
4. Estimate the land value
5. Use ALL THREE approaches to estimate value
6. Reconcile the estimated values to determine the final value estimate
7. Communicate the final value estimate
Highest and Best Use - correct answer(s) ✔✔ Legally permissible
Physically possible
Financially feasible
Maximally productive
Describe the difference between specific and general data - correct answer(s) ✔✔ Specific
data is information and details about the subject property and the comparables.
General data is information about the property's location - its country, region, city, and
neighborhood.
Direct sales comparison - correct answer(s) ✔✔ sales of comparable vacant parcels are
analyzed and adjusted to indicate a value for the subject land
Allocation - correct answer(s) ✔✔ a typical ratio of land value to total value is derived from
comparable properties and applied to the subject
Extraction - correct answer(s) ✔✔ land value is estimated by deducting the depreciated cost
of improvements on a property from the total sale price of the property.
Subdivision development analysis - correct answer(s) ✔✔ costs and profit are deducted from
estimated gross sale prices of subdivided and finished lots, and net sales proceeds are
discounted to present value
