Real Estate HW CH.1

Which of the following would be considered a tangible asset? land lease agreement mortgage listed REIT

land

Real estate is defined as land and its permanent improvements. Which of the following is an example of an improvement to the land? fence building water and sewer systems personal property

water and sewer systems

Which of the following is not important to the location of most commercial properties? Access to customers Visibility Access to schools Availability of communications infrastructure

Access to schools

Among the following four categories, which is the largest asset category in the portfolio of the average U.S. household? Housing Pension assets Deposits and money market funds Government and corporate bonds

Housing

Participants in the capital markets can be divided into four main categories: private equity, public equity, private debt, and public debt. Bank lending as a source of financing for the acquisition of real property occurs in the: Private equity market Public equity market Private debt market Public debt market

Private debt market

Real estate values derive from the interaction of three different sectors in the economy. Which of the following sectors serves to allocate financial resources among households and firms requiring funds? user market capital market government property market

capital market

An example of a real estate asset that trades in the public debt market is a(n): real property. real estate operating company. equity REIT. commercial mortgage-backed security (CMBS).

commercial mortgage-backed security (CMBS).

Based on your understanding of the supply and demand dynamics of user/space markets, the new construction of units would, all else equal, cause which of the following effects? decrease equilibrium rental rates and decrease property value decrease equilibrium rental rates and increase property value increase equilibrium rental rates and decrease property value increase equilibrium rental rates and increase property value

decrease equilibrium rental rates and decrease property value

The expected stream of rental income is capitalized into value by converting expected future cash flows into present value through a process called: amortization. discounted cash flow analysis. direct capitalization. proforma.

discounted cash flow analysis.

An example of a real estate asset that trades in the public equity market is a(n): real property. home mortgage. equity REIT. commercial mortgage-backed security (CMBS).

equity REIT.

When viewed as a tangible asset, real estate can be defined as the land and its permanent improvements. Improvements on the land include: fences. walkways. sewer systems. streets.

fences.

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: homogeneous. heterogeneous. substitutes. complements.

heterogeneous.

Real estate markets differ from other asset classes by having all of the following characteristics except local market. high transaction costs. segmented market. homogeneous product.

homogeneous product.

Storm water drainage systems are best described as tangible assets. improvements to the land. intangible assets. improvements on the land.

improvements to the land.

Based on your understanding of the supply and demand dynamics of user/space markets, an increase in demand for leasable space would, all else equal, cause which of the following effects? decrease equilibrium rental rates and decrease property value decrease equilibrium rental rates and increase property value increase equilibrium rental rates and decrease property value increase equilibrium rental rates and increase property value

increase equilibrium rental rates and increase property value

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): tangible asset. intangible asset. parallel asset. personal asset.

intangible asset.

Especially in terms of retail properties, which of the following attributes is considered the most likely to result in drastic value differences between otherwise similar properties? structural attributes financing attributes location attributes land attributes

location attributes

Real estate is property, which can be either a tangible or an intangible asset. Which of the following would be considered an intangible asset? land building mortgage fence

mortgage

Capital markets can be divided into four main categories: private equity, public equity, private debt, and public debt. An example of a real estate asset that trades in the private equity market is a(n): real property. home mortgage. equity REIT. mortgage-backed security.

real property.

All of the following are examples of an improvement on the land EXCEPT: fences. building. walls. streets.

streets

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): tangible asset. intangible asset. parallel asset. personal asset.

tangible asset

Real estate consists of the physical structures and infrastructure that accompany the land. All of the following are examples of an improvement to the land EXCEPT: walkways. the building and parking lot. sewer system. streets.

the building and parking lot.

Competition for the currently available supply of locations and space coupled with the existing supply of leasable space, determines: the current level of rental rates for each submarket and property. the riskiness of the expected cash flows of an income-producing property. the timing of the expected cash flows of an income-producing property. the cost of financing the purchase of a property.

the current level of rental rates for each submarket and property.

If we desire to classify land by its use, land that consists of residential, industrial, commercial, and institutional land uses would be classified as: rural land. federal land. urban land. undeveloped land.

urban land.

The demand for real estate derives from the need that market participants (e.g., owner occupants, tenants, renters) have for shelter and convenient access to other locations. This competition for physical location and space occurs in the: user market. capital market. government sector. property market.

user market.