FIN 467 EXAM 1 QUESTIONS AND ANSWERS
When viewed as a tangible asset, real estate can be defined as the land and its permanent
improvements. Improvements on the land include: - CORRECT ANSWER✅✅fences
The term real estate is used in three fundamental ways. When real estate is defined as the land and its
improvements, it is being viewed as purely a(n): - CORRECT ANSWER✅✅tangible asset
The term real estate is used in three fundamental ways. When real estate is defined as a bundle of rights
associated with ownership and the use of the site and improvements, it is being viewed as purely a(n): -
CORRECT ANSWER✅✅intangible asset
Real estate is property, which can be either a tangible or an intangible asset. Which of the following
would be considered an intangible asset? - CORRECT ANSWER✅✅mortgage
Which of the following would be considered a tangible asset? - CORRECT ANSWER✅✅land
If we desire to classify land by its use, land that does not include any improvements to the land would be
categorized as: - CORRECT ANSWER✅✅"raw" land
If we desire to classify land by its use, land that consists of residential, industrial, commercial, and
institutional land uses would be classified as: - CORRECT ANSWER✅✅urban land
The expected stream of rental income is capitalized into value by converting expected future cash flows
into present value through a process called: - CORRECT ANSWER✅✅discounted cash-flow analysis
Each commercial property has unique features, whether it is its age, the building design of its structures,
occupancy or its location. As such, real estate markets consist of assets that are considered: - CORRECT
ANSWER✅✅heterogeneous
The investment grade property market is typically targeted by all the following groups of investors
EXCEPT: - CORRECT ANSWER✅✅individual investors
,Considered a fundamental pricing metric in commercial real estate markets, the ratio of a property's
annual net operating income to its market value is more commonly referred to as a(n): - CORRECT
ANSWER✅✅capitalization rate
Helping to constrain entry into real estate related occupations, which of the following branches of
government is directly involved in establishing rules and regulations for the licensing of professionals in
the field of real estate? - CORRECT ANSWER✅✅state government
Using the I/RV formula, if a property's expected annual net operating income is $89,100 and its current
market value is $1,060,000, the property's implied capitalization rate is: - CORRECT ANSWER✅✅8.4%
(Ch.2) A principal definition of real estate is as a bundle of rights associated with the possession, use,
and disposition of property. Each of the following is a fundamental characteristic of property rights
EXCEPT: - CORRECT ANSWER✅✅They apply only to tangible assets
Property rights can be divided into two classes, real and personal. Which of the following is an example
of real property? - CORRECT ANSWER✅✅an office building
Property rights can be dismantled into lesser bundles, referred to as interests, which can then be held by
different individuals. Interests in real property that include exclusive possession are referred to as: -
CORRECT ANSWER✅✅estates
An easement is the right to use land for a specific and limited purpose. Which of the following
easements involves a relationship between two parcels of land, is a permanent feature of both parcels
involved, and gives the dominant parcel some intrusive use of the servient parcel? - CORRECT
ANSWER✅✅affirmative easement appurtenant
An important distinction is the difference between an easement and a license. All of the following
characteristics pertain to a license EXCEPT: - CORRECT ANSWER✅✅a license is enduring.
Following the completion of a contract for construction or other improvements to a property, a
contractor has the right to establish a lien on a property as protection against the case that a property
owner defaults on the construction contract and/or fails to pay for the completed work. This lien is more
commonly referred to as a(n): - CORRECT ANSWER✅✅mechanics' lien.
, Specific liens derive directly from events related to a property. One such lien is established when the
issuance of bonds is used to finance improvements within a private community This type of lien is more
commonly referred to as a(n): - CORRECT ANSWER✅✅community development district (CDD) lien.
Co-ownership can occur in a variety of ways, with significant variation in how the bundle of rights is
jointly held. All of the following entities are forms of direct co-ownership EXCEPT: - CORRECT
ANSWER✅✅partnership.
Which of the following types of direct co-ownership is a form of joint tenancy for spouses created by
marriage that protects each spouse from liens arising from either spouse alone? - CORRECT
ANSWER✅✅tenancy by the entirety
Which of the following types of direct co-ownership combines single person ownership with tenancy in
common? - CORRECT ANSWER✅✅condominium
Which of the following forms of co-ownership, historically used for apartment buildings, is not
considered a form of true direct co-ownership, but rather qualifies as a proprietary corporation? -
CORRECT ANSWER✅✅cooperative
Property rights created from legally enforceable marriage have a clear implication for real estate
transactions. Which of the following marital property rights gives a spouse a one-half claim on all
property acquired "from the fruits of the marriage?" - CORRECT ANSWER✅✅community property
When multiple individuals have use of a property, but their interests are not simultaneous, this type of
co-ownership is referred to as a: - CORRECT ANSWER✅✅timeshare.
A leasehold interest for a specific period of time is more commonly referred to as: - CORRECT
ANSWER✅✅tenancy for years.
When identifying an easement appurtenant, the parcel of land that benefits from the right to use the
land in question is referred to as the: - CORRECT ANSWER✅✅dominant parcel.
When viewed as a tangible asset, real estate can be defined as the land and its permanent
improvements. Improvements on the land include: - CORRECT ANSWER✅✅fences
The term real estate is used in three fundamental ways. When real estate is defined as the land and its
improvements, it is being viewed as purely a(n): - CORRECT ANSWER✅✅tangible asset
The term real estate is used in three fundamental ways. When real estate is defined as a bundle of rights
associated with ownership and the use of the site and improvements, it is being viewed as purely a(n): -
CORRECT ANSWER✅✅intangible asset
Real estate is property, which can be either a tangible or an intangible asset. Which of the following
would be considered an intangible asset? - CORRECT ANSWER✅✅mortgage
Which of the following would be considered a tangible asset? - CORRECT ANSWER✅✅land
If we desire to classify land by its use, land that does not include any improvements to the land would be
categorized as: - CORRECT ANSWER✅✅"raw" land
If we desire to classify land by its use, land that consists of residential, industrial, commercial, and
institutional land uses would be classified as: - CORRECT ANSWER✅✅urban land
The expected stream of rental income is capitalized into value by converting expected future cash flows
into present value through a process called: - CORRECT ANSWER✅✅discounted cash-flow analysis
Each commercial property has unique features, whether it is its age, the building design of its structures,
occupancy or its location. As such, real estate markets consist of assets that are considered: - CORRECT
ANSWER✅✅heterogeneous
The investment grade property market is typically targeted by all the following groups of investors
EXCEPT: - CORRECT ANSWER✅✅individual investors
,Considered a fundamental pricing metric in commercial real estate markets, the ratio of a property's
annual net operating income to its market value is more commonly referred to as a(n): - CORRECT
ANSWER✅✅capitalization rate
Helping to constrain entry into real estate related occupations, which of the following branches of
government is directly involved in establishing rules and regulations for the licensing of professionals in
the field of real estate? - CORRECT ANSWER✅✅state government
Using the I/RV formula, if a property's expected annual net operating income is $89,100 and its current
market value is $1,060,000, the property's implied capitalization rate is: - CORRECT ANSWER✅✅8.4%
(Ch.2) A principal definition of real estate is as a bundle of rights associated with the possession, use,
and disposition of property. Each of the following is a fundamental characteristic of property rights
EXCEPT: - CORRECT ANSWER✅✅They apply only to tangible assets
Property rights can be divided into two classes, real and personal. Which of the following is an example
of real property? - CORRECT ANSWER✅✅an office building
Property rights can be dismantled into lesser bundles, referred to as interests, which can then be held by
different individuals. Interests in real property that include exclusive possession are referred to as: -
CORRECT ANSWER✅✅estates
An easement is the right to use land for a specific and limited purpose. Which of the following
easements involves a relationship between two parcels of land, is a permanent feature of both parcels
involved, and gives the dominant parcel some intrusive use of the servient parcel? - CORRECT
ANSWER✅✅affirmative easement appurtenant
An important distinction is the difference between an easement and a license. All of the following
characteristics pertain to a license EXCEPT: - CORRECT ANSWER✅✅a license is enduring.
Following the completion of a contract for construction or other improvements to a property, a
contractor has the right to establish a lien on a property as protection against the case that a property
owner defaults on the construction contract and/or fails to pay for the completed work. This lien is more
commonly referred to as a(n): - CORRECT ANSWER✅✅mechanics' lien.
, Specific liens derive directly from events related to a property. One such lien is established when the
issuance of bonds is used to finance improvements within a private community This type of lien is more
commonly referred to as a(n): - CORRECT ANSWER✅✅community development district (CDD) lien.
Co-ownership can occur in a variety of ways, with significant variation in how the bundle of rights is
jointly held. All of the following entities are forms of direct co-ownership EXCEPT: - CORRECT
ANSWER✅✅partnership.
Which of the following types of direct co-ownership is a form of joint tenancy for spouses created by
marriage that protects each spouse from liens arising from either spouse alone? - CORRECT
ANSWER✅✅tenancy by the entirety
Which of the following types of direct co-ownership combines single person ownership with tenancy in
common? - CORRECT ANSWER✅✅condominium
Which of the following forms of co-ownership, historically used for apartment buildings, is not
considered a form of true direct co-ownership, but rather qualifies as a proprietary corporation? -
CORRECT ANSWER✅✅cooperative
Property rights created from legally enforceable marriage have a clear implication for real estate
transactions. Which of the following marital property rights gives a spouse a one-half claim on all
property acquired "from the fruits of the marriage?" - CORRECT ANSWER✅✅community property
When multiple individuals have use of a property, but their interests are not simultaneous, this type of
co-ownership is referred to as a: - CORRECT ANSWER✅✅timeshare.
A leasehold interest for a specific period of time is more commonly referred to as: - CORRECT
ANSWER✅✅tenancy for years.
When identifying an easement appurtenant, the parcel of land that benefits from the right to use the
land in question is referred to as the: - CORRECT ANSWER✅✅dominant parcel.
