RE Unit 14

14. A property was listed for sale at $100,000. If the original cost was 80% of the list price, what will the profit be if it sells for $100,000? a. 10% b. 15% c. 20% d. 25%

d. 25%

11. The point at which supply and demand are equal is known as a. highest and best use. b. balance. c. conformity. d. equilibrium.

d. equilibrium.

16. When preparing his annual income tax return, the homeowner may be able to deduct all of the following EXCEPT a. real estate taxes. b. mortgage interest on a first home. c. mortgage interest on a second home. d. mortgage interest on a third home.

d. mortgage interest on a third home.

6. The buyers paid cash for their new home. At the same time, they purchased flood insurance. At what time will the flood insurance be effective? a. After 30 days b. Immediately c. Seven days after closing d. 60 days after closing

a. After 30 days

4. What is the largest trade association that serves real estate licensees? a. National Association of REALTORS® (NAR) b. National Association of Real Estate Brokers (NAREB) c. Real Estate Educators Association (REEA) d. American Society of Home Inspectors (ASHI)

a. National Association of REALTORS® (NAR)

8. Which of the following affects demand? a. Population b. Construction costs c. Government controls d. The labor force

a. Population

7. A world-renown company plans to open a new large manufacturing plant. In this area, housing prices are likely to a. increase due to increased demand. b. decrease since workers can remain in their homes and drive further distances. c. be unaffected because those who build the manufacturing plant will relocate after the plant has been built. d. wildly fluctuate, sometimes losing value.

a. increase due to increased demand.

1. In order to offset expenses, a highrise condominium community rents out the ground floor to a convenience store. The building is an example of a. mixed use. b. special-purpose use. c. c. commercial use. d. a planned unit development (PUD).

a. mixed use.

12. When the supply of a commodity decreases, a. prices tend to rise. b. prices tend to drop. c. demand tends to rise. d. demand tends to drop.

a. prices tend to rise.

5. The basic responsibility of a property manager is to a. protect the owner's investment. b. minimize the return on investment. c. slash expenses. d. increase rents.

a. protect the owner's investment.

18. The desirability of the location of a residence is influenced by all of the following EXCEPT a. retirement prospects. b. employment opportunities. c. social services. d. cultural advantages.

a. retirement prospects.

15. Most homeowners' insurance policies contain which of the following clauses? a. Property improvement clause b. Coinsurance clause c. Co-ownership clause d. Property devaluation clause

b. Coinsurance clause

9. All of the following are categories of the uses of real property EXCEPT a. residential. b. developmental. c. agricultural. d. industrial.

b. developmental.

19. A basic homeowners' insurance policy would protect against all of the following EXCEPT a. fire and lightening. b. flooding. c. windstorm and hail. d. water damage.

b. flooding.

13. In addition to the affordability of a home, what is a primary consideration in the selection of a property? a. Construction specifications b. Age of the improvements c. Location of the property d. Landscaping and exterior

c. Location of the property

10. All of the following affect how quickly the forces of supply and demand work EXCEPT a. degree of standardization of the product. b. mobility of the product. c. degree of standardization of the product's price. d. mobility of the parties to the transaction.

c. degree of standardization of the product's price.

20. Federal income tax regulations allow homeowners to reduce their taxable income by amounts paid for a. repairs and maintenance. b. hazard insurance premiums. c. real estate taxes. d. principal and interest.

c. real estate taxes.

3. Under the current tax law, MOST homeowners a. may use a one-time $250,000 exclusion if they file their taxes jointly. b. will be taxed at the current capital gains rate. c. will never pay capital gains tax on the sale of their homes. d. will be taxed at a lower rate as they get older.

c. will never pay capital gains tax on the sale of their homes.

2. What is the capital gains tax exclusion available to homeowners who file their income tax as single filers? a. $500,000 b. $225,000 c. $125,000 d. $250,000

d. $250,000

17. A building lot was sold for $88,000. If the seller made a profit of 10 percent, what was the original cost of the property? a. $61,000 b. $79,000 c. $79,200 d. $80,000

d. $80,000