BOMI Exam Practice Questions and Answers | 100% Pass

BOMI Exam Practice Questions and Answers | 100% Pass List the seven valuation criteria specific to real property - Answer️️ -location and construction, production of growth capital, production of income, durability, response to change, enhancement of activities within a building, productivity What is the difference between a capital investment and income? - Answer️️ -Capital investment: is where monies are invested to produce or increase asset value. (not recognized until an asset is sold) Income: is generated from the rental of a building that is reflected on an income statement during the period it was earned. Define churn rate. - Answer️️ -the percentage of a space inventory that is reconfigured in some way (walls, furniture, finishes, utilities) in a year. What is the overall goal of the property manager? - Answer️️ -Their goal is to keep the building full of tenants and running efficiently, maximizing net income for the owner while minimizing risks. Define investment ROI (return on investment) and capital ROI. - Answer️️ -Investment ROI: is the return on the investment while it is being held Capital ROI: is the return on the investment when they are done with it. ©SOPHIABENNETT EXAM SOLUTIONS_2024/2025 Tuesday, September 3, 2024 10:30 AM Page | 2 What are the four standard financial evaluation techniques typically applied to investment/production decisions? - Answer️️ -break-even (cost benefit) analysis, payback analysis, net present value analysis, internal rate of return Define the evaluation technique of payback analysis. - Answer️️ -evaluates the length of time required to pay the investor back for the quantity of capital inputs. What do scarcity and utility mean, as they relate to the characteristics of real estate? - Answer️️ -Scarcity: Real estate is limited. The quantity of land on planet Earth is fixed with little possibility of creating more. Utility: Real estate has the power of an economic good. It fills a human need or provides a desired service. While scarcity and utility are important, what is the most important factor when considering real estate as an investment? - Answer️️ -Location Define "ad valorenm" - Answer️️ -Taxes that are collected from real estate owners by state and local governments based on their property value. What is meant by the term "eminent domain" - Answer️️ -The right fo a government or properly authorized entity to take private property for public use. Which power gives the government the right to take title to intestate property without heirs? - Answer️️ -Escheat Explain the Rule of 72. - Answer️️ -occurs when an investment is made and the interest earned on that investment is left to accumulate as capital, that is, to compound. ©SOPHIABENNETT EXAM SOLUTIONS_2024/2025 Tuesday, September 3, 2024 10:30 AM Page | 3 Using the Rule of 72, how log will it take for money let to compound at 12% interest to double? - Answer️️ -6 years (72/12 = 6) Define "yield" - Answer️️ -The total return on an investment during the period it is held When a Federal Reserve sells securities and lowers the discount rate, what happens to the interest rates? - Answer️️ -Increase What is meant by liquidity - Answer️️ -The ability to sell an investment quickly for cash determines its liquidity. Liquidity is often an anticipated or perceived investment quality. Liquidity is highly dependent on orderliness and stability in the seco