Arizona School of Real Estate & Business Sales Exam QUESTIONS WITH CORRECT AND
VERIFIED ANSWERS|LATEST 2025
When a deed in lieu of foreclosure is given to a lender, which of the following is true? -
CORRECT ANSWER-Time and cost are less
B buys land from W using a deed of trust as security for the carryback. B makes all the
payments except the final three and is now in default. W does nothing and decides not to
foreclose until later. By doing this W is exercising his right of: -CORRECT ANSWER-
Forbearance
A commercial building is sold in a foreclosure for $100,000 less than the balance due the
lender. Which of the following is true? -CORRECT ANSWER-The lender can obtain a
deficiency judgment against the borrower
Which of the agencies listed below guarantees loans? -CORRECT ANSWER-GNMA
A buyer pays 20% down and obtains a real estate mortgage. The buyers makes no further
payments. What clause would the lender now exercise? -CORRECT ANSWER-Acceleration
A loan which is subordinate to other loans, but includes the amount of the other loans is
called: -CORRECT ANSWER-Wraparound
A seasoned loan refers to: -CORRECT ANSWER-Good Payment History
Who has title in a land contract? -CORRECT ANSWER-Vendor
,What would discourage a buyer to take a bank wrap around mortgage? -CORRECT ANSWER-
Seller's loan has an alienation clause
After satisfying a first lien, what position is the second lien now in? -CORRECT ANSWER-First
Position
A property has both a first and second lien. Both are in default. Which of the following
statements are true? -CORRECT ANSWER-The second would be terminated if the first goes
through a successful judicial foreclosure
FNMA is: -CORRECT ANSWER-Government sponsored agency
Land contract is another name for: -CORRECT ANSWER-Agreement for Sale
When an estoppel certificate is used by a lender, he is primarily working in the: -CORRECT
ANSWER-Secondary market
Which of the following would not apply to a mortgage? -CORRECT ANSWER-Deed
Recordation
Which of the following applies to the Federal National Mortgage Association? -CORRECT
ANSWER-Government related agency
After a mortgage foreclosure, if the sale amount was insufficient to cover the debt, the
lender may ask for: -CORRECT ANSWER-Deficiency judgment
A vendor would be which of the following parties? -CORRECT ANSWER-Seller in an
agreement for sale
The vendee is the: -CORRECT ANSWER-Buyer in an agreement for sale
,What is it called when the Federal Reserve loans money to commercial banks? -CORRECT
ANSWER-Discount rate
After a trustee's sale the excess proceeds go to the: -CORRECT ANSWER-Trustor
A construction loan is generally considered a: -CORRECT ANSWER-Short term- interim
Construction loan monies are generally obtained from -CORRECT ANSWER-Commercial
banks
When a sale lease back takes place the advantage for the lessee is that he can: -CORRECT
ANSWER-Deduct the rent as an expense
Which of the following could be borrowed in a tax deferred exchange? -CORRECT ANSWER-
Boot
When can the tax on a capital gain be deferred? -CORRECT ANSWER-Property exchange
Which of the following would not be considered an income tax deduction: -CORRECT
ANSWER-Tax depreciation on your personal residence
A real estate investment that acts as a mutual fund but does not give you individual
ownership is best described as a: -CORRECT ANSWER-Real Estate Investment Trust, a
security instrument
When figuring capital gain from the sale of a property, which of the following would lower
your gain? -CORRECT ANSWER-Capital improvements
When a new stock is being offered to the public, which of the following would most likely be
offered as a disclosure? -CORRECT ANSWER-Prospectus
, If a party wants to maximize leverage, he should: -CORRECT ANSWER-Have the highest loan
to value ratio
When a buyer is using 100% leverage in a transaction, they would least likely be interested
in: -CORRECT ANSWER-short term loan
Boot is best defined as: -CORRECT ANSWER-Loan interest
Regarding residential owner occupied property, which of the following would be a deduction
on a Federal Income Tax return -CORRECT ANSWER-Price Paid
Buyer wants to know his cash on cash return. What is he most interested in? -CORRECT
ANSWER-Investment
When can an owner of a single family residence depreciate the property for tax purposes: -
CORRECT ANSWER-If the property is a rental
You own a duplex and rent one unit. Which of the following is true? -CORRECT ANSWER-You
may deduct the expenses only for the rented unit
Which of the following can be deducted from income tax: -CORRECT ANSWER-Property taxes
and interest payments
What is tax deductible on your personal residence? -CORRECT ANSWER-Interest and taxes
Cash on cash return would involve which of the following concepts -CORRECT ANSWER-
Leverage
If property is to be depreciated, it must be: -CORRECT ANSWER-Improved
VERIFIED ANSWERS|LATEST 2025
When a deed in lieu of foreclosure is given to a lender, which of the following is true? -
CORRECT ANSWER-Time and cost are less
B buys land from W using a deed of trust as security for the carryback. B makes all the
payments except the final three and is now in default. W does nothing and decides not to
foreclose until later. By doing this W is exercising his right of: -CORRECT ANSWER-
Forbearance
A commercial building is sold in a foreclosure for $100,000 less than the balance due the
lender. Which of the following is true? -CORRECT ANSWER-The lender can obtain a
deficiency judgment against the borrower
Which of the agencies listed below guarantees loans? -CORRECT ANSWER-GNMA
A buyer pays 20% down and obtains a real estate mortgage. The buyers makes no further
payments. What clause would the lender now exercise? -CORRECT ANSWER-Acceleration
A loan which is subordinate to other loans, but includes the amount of the other loans is
called: -CORRECT ANSWER-Wraparound
A seasoned loan refers to: -CORRECT ANSWER-Good Payment History
Who has title in a land contract? -CORRECT ANSWER-Vendor
,What would discourage a buyer to take a bank wrap around mortgage? -CORRECT ANSWER-
Seller's loan has an alienation clause
After satisfying a first lien, what position is the second lien now in? -CORRECT ANSWER-First
Position
A property has both a first and second lien. Both are in default. Which of the following
statements are true? -CORRECT ANSWER-The second would be terminated if the first goes
through a successful judicial foreclosure
FNMA is: -CORRECT ANSWER-Government sponsored agency
Land contract is another name for: -CORRECT ANSWER-Agreement for Sale
When an estoppel certificate is used by a lender, he is primarily working in the: -CORRECT
ANSWER-Secondary market
Which of the following would not apply to a mortgage? -CORRECT ANSWER-Deed
Recordation
Which of the following applies to the Federal National Mortgage Association? -CORRECT
ANSWER-Government related agency
After a mortgage foreclosure, if the sale amount was insufficient to cover the debt, the
lender may ask for: -CORRECT ANSWER-Deficiency judgment
A vendor would be which of the following parties? -CORRECT ANSWER-Seller in an
agreement for sale
The vendee is the: -CORRECT ANSWER-Buyer in an agreement for sale
,What is it called when the Federal Reserve loans money to commercial banks? -CORRECT
ANSWER-Discount rate
After a trustee's sale the excess proceeds go to the: -CORRECT ANSWER-Trustor
A construction loan is generally considered a: -CORRECT ANSWER-Short term- interim
Construction loan monies are generally obtained from -CORRECT ANSWER-Commercial
banks
When a sale lease back takes place the advantage for the lessee is that he can: -CORRECT
ANSWER-Deduct the rent as an expense
Which of the following could be borrowed in a tax deferred exchange? -CORRECT ANSWER-
Boot
When can the tax on a capital gain be deferred? -CORRECT ANSWER-Property exchange
Which of the following would not be considered an income tax deduction: -CORRECT
ANSWER-Tax depreciation on your personal residence
A real estate investment that acts as a mutual fund but does not give you individual
ownership is best described as a: -CORRECT ANSWER-Real Estate Investment Trust, a
security instrument
When figuring capital gain from the sale of a property, which of the following would lower
your gain? -CORRECT ANSWER-Capital improvements
When a new stock is being offered to the public, which of the following would most likely be
offered as a disclosure? -CORRECT ANSWER-Prospectus
, If a party wants to maximize leverage, he should: -CORRECT ANSWER-Have the highest loan
to value ratio
When a buyer is using 100% leverage in a transaction, they would least likely be interested
in: -CORRECT ANSWER-short term loan
Boot is best defined as: -CORRECT ANSWER-Loan interest
Regarding residential owner occupied property, which of the following would be a deduction
on a Federal Income Tax return -CORRECT ANSWER-Price Paid
Buyer wants to know his cash on cash return. What is he most interested in? -CORRECT
ANSWER-Investment
When can an owner of a single family residence depreciate the property for tax purposes: -
CORRECT ANSWER-If the property is a rental
You own a duplex and rent one unit. Which of the following is true? -CORRECT ANSWER-You
may deduct the expenses only for the rented unit
Which of the following can be deducted from income tax: -CORRECT ANSWER-Property taxes
and interest payments
What is tax deductible on your personal residence? -CORRECT ANSWER-Interest and taxes
Cash on cash return would involve which of the following concepts -CORRECT ANSWER-
Leverage
If property is to be depreciated, it must be: -CORRECT ANSWER-Improved
