IAAO Course 102 Review questions with
| | | | | |
correct answers |
Anticipation |- |correct |answer |Value |is |created |by |the |expectation |of |benefits |to |be |derived |in |
the |future.
Leverage |- |correct |answer |The |borrowing |of |funds |in |hopes |of |earning |a |greater |return |than |
the |cost |of |the |borrowed |funds.
Chattel |mortgage |- |correct |answer |A |mortgage |only |on |persona |property
Yo |- |correct |answer |Also |known |as |the |discount |rate, |reflects |the |return |on |investment.
Safe |rate |- |correct |answer |Base |rate |on |the |safest |investments |such |as |government |insured |
investments |(Yo).
Risk |rate |- |correct |answer |An |amount |in |addition |to |the |safe |rate |which |compensates |the |
investor |for |the |degree |of |risk |in |the |investment |(Yo).
Rate |for |non-liquidity |- |correct |answer |An |amount |in |addition |to |the |safe |rate |and |the |risk |rate
|which |compensates |the |investor |for |the |time |necessary |to |convert |the |real |estate |into |cash |
(Yo).
Rate |for |management |- |correct |answer |An |amount |in |addition |to |the |safe |rate, |risk |rate, |and |
rate |for |non-liquidity |which |compensates |the |investor |for |the |decision |making |process |to |
manage |the |real |estate |investment. |(Yo)
Recapture |rate |- |correct |answer |Provides |for |the |return |of |the |investment |in |the |wasting |
portion |of |the |asset.
, Effective |tax |rate |(ETR) |- |correct |answer |Reflects |the |relationship |between |the |real |estate |taxes
|and |the |value |of |the |property.
IRV |- |correct |answer |Income, |value, |rate
VIF |- |correct |answer |Income, |value, |factor
Lease |- |correct |answer |A |written |document |in |which |the |rights |to |use |and |occupy |land |or |
structures |are |transferred |by |the |owner |to |another |for |a |specified |period |of |time |for |a |
specified |rent. |It |is |a |contract |and |a |conveyance.
Percentage |lease |- |correct |answer |A |contract |which |calls |for |a |fixed |minimum |base |rent |and |a |
variable |rent |(overage) |which |is |based |on |volume |of |business, |sales, |productivity, |or |use |of |the
|property |by |the |tenant.
Tenant |Improvements |- |correct |answer |Allowance |given |by |landlord |for |work |done |to |the |
improvement. |The |landlord |will |recover |the |costs |by |amortizing |it |over |the |life |of |the |lease |
and |including |it |in |the |lease |payment.
Excess |rent |- |correct |answer |The |amount |which |contract |rent |exceeds |market |rent.
Deficit |rent |- |correct |answer |Leasehold |rent |or |leasehold |income- |Occurs |when |market |rent |is |
greater |than |contract |rent.
d. |All |of |the |above |- |correct |answer |Which |of |the |following |would |be |considered |a |proper |
expense |in |the |reconstructed |operating |expense |statement? |
a. |Salaries
b. |Management
c. |Utilities
| | | | | |
correct answers |
Anticipation |- |correct |answer |Value |is |created |by |the |expectation |of |benefits |to |be |derived |in |
the |future.
Leverage |- |correct |answer |The |borrowing |of |funds |in |hopes |of |earning |a |greater |return |than |
the |cost |of |the |borrowed |funds.
Chattel |mortgage |- |correct |answer |A |mortgage |only |on |persona |property
Yo |- |correct |answer |Also |known |as |the |discount |rate, |reflects |the |return |on |investment.
Safe |rate |- |correct |answer |Base |rate |on |the |safest |investments |such |as |government |insured |
investments |(Yo).
Risk |rate |- |correct |answer |An |amount |in |addition |to |the |safe |rate |which |compensates |the |
investor |for |the |degree |of |risk |in |the |investment |(Yo).
Rate |for |non-liquidity |- |correct |answer |An |amount |in |addition |to |the |safe |rate |and |the |risk |rate
|which |compensates |the |investor |for |the |time |necessary |to |convert |the |real |estate |into |cash |
(Yo).
Rate |for |management |- |correct |answer |An |amount |in |addition |to |the |safe |rate, |risk |rate, |and |
rate |for |non-liquidity |which |compensates |the |investor |for |the |decision |making |process |to |
manage |the |real |estate |investment. |(Yo)
Recapture |rate |- |correct |answer |Provides |for |the |return |of |the |investment |in |the |wasting |
portion |of |the |asset.
, Effective |tax |rate |(ETR) |- |correct |answer |Reflects |the |relationship |between |the |real |estate |taxes
|and |the |value |of |the |property.
IRV |- |correct |answer |Income, |value, |rate
VIF |- |correct |answer |Income, |value, |factor
Lease |- |correct |answer |A |written |document |in |which |the |rights |to |use |and |occupy |land |or |
structures |are |transferred |by |the |owner |to |another |for |a |specified |period |of |time |for |a |
specified |rent. |It |is |a |contract |and |a |conveyance.
Percentage |lease |- |correct |answer |A |contract |which |calls |for |a |fixed |minimum |base |rent |and |a |
variable |rent |(overage) |which |is |based |on |volume |of |business, |sales, |productivity, |or |use |of |the
|property |by |the |tenant.
Tenant |Improvements |- |correct |answer |Allowance |given |by |landlord |for |work |done |to |the |
improvement. |The |landlord |will |recover |the |costs |by |amortizing |it |over |the |life |of |the |lease |
and |including |it |in |the |lease |payment.
Excess |rent |- |correct |answer |The |amount |which |contract |rent |exceeds |market |rent.
Deficit |rent |- |correct |answer |Leasehold |rent |or |leasehold |income- |Occurs |when |market |rent |is |
greater |than |contract |rent.
d. |All |of |the |above |- |correct |answer |Which |of |the |following |would |be |considered |a |proper |
expense |in |the |reconstructed |operating |expense |statement? |
a. |Salaries
b. |Management
c. |Utilities
