REE 4204 EXAM PREP ALREADY PASSED
Why do interest rates matter? - =you want to pay the lowest rate you can because interest
determines the payment you have.
How are interest rates determined? - =real rate + inflation rate = interest rate
What are some risks in real estate? - =default risk, interest rate risk, inflation risk
What is a yield curve? - =relationship between interest rates on short term assets vs. long term
assets.
What is the market value? - =the average price the market is willing to pay for that asset
What is financial leverage and why do you care about it? - =positive (favorable) leverage
increases your rate of return
What is a call option? - =the ability to pay off the loan early
What is a put option? - =allows the borrower to put the property in place of the debt
what is the function of an intermediary? - =its a 3rd party (mortgage lender) that helps argue a
contract
What is an efficient market? - =things being placed efficiently
What kind of market is the real estate market? - =weak form efficiency
Why was there little need for mortgage lending in the colonial US? - =people used to build their
own cabins and they claimed land and homesteaded
Why do interest rates matter? - =you want to pay the lowest rate you can because interest
determines the payment you have.
How are interest rates determined? - =real rate + inflation rate = interest rate
What are some risks in real estate? - =default risk, interest rate risk, inflation risk
What is a yield curve? - =relationship between interest rates on short term assets vs. long term
assets.
What is the market value? - =the average price the market is willing to pay for that asset
What is financial leverage and why do you care about it? - =positive (favorable) leverage
increases your rate of return
What is a call option? - =the ability to pay off the loan early
What is a put option? - =allows the borrower to put the property in place of the debt
what is the function of an intermediary? - =its a 3rd party (mortgage lender) that helps argue a
contract
What is an efficient market? - =things being placed efficiently
What kind of market is the real estate market? - =weak form efficiency
Why was there little need for mortgage lending in the colonial US? - =people used to build their
own cabins and they claimed land and homesteaded
