Chapter 1 quiz FI 331

f we desire to classify land by its use, land that does not include any improvements to the land would be categorized as: "raw" land. building site. developed land. property infrastructure.

"raw" land.

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): appreciation rate. capitalization rate. discount rate. internal rate of return.

capitalization rate.

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.

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.

The national government can have a significant impact on the value of real estate through: property tax policy. income tax policy. building Codes. real estate licensing requirements.

income tax policy.

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 investment grade property market is typically targeted by all the following groups of investors EXCEPT: pension funds. individual investors. listed equity REITs. All of these are correct.

individual investors.

Primarily through land use controls and property tax policy, which of the following branches of government has the largest influence on real estate values? local government state government national government foreign government

local government

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.

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.

Capital markets can be divided into two broad categories: equity interests and debt interests. Equity investors in real estate expect to earn a return on their investment through: the collection of rent and selling or refinancing the asset. the collection of interest on the borrowed funds used to purchase the property. the receipt of property taxes. the case of a borrower default on required mortgage payments.

the collection of rent and selling or refinancing the asset.

According to the Department of Agriculture, which of the following land types constitutes the lowest percentage of land use in the United States? crop land federal land and water areas forest land urban land

urban 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: rural land. federal land. urban land. undeveloped land.

urban land.