REAE 3325 CH 1

If a property's expected annual net income is $89,100 and its current market value is $1,060,000, the property's capitalization rate is: 4.2%. 8.4%. 11.9%. 33.6%.

8.4%.

Real estate markets tend to be highly segmented due to the heterogeneous nature of the products. Which of the following examples depicts this issue of market segmentation? A couple searching for a single-family detached unit is willing to consider other residential property types such as an attached townhouse unit or condominium. A couple searching for a single-family detached unit has limited their search to homes in a single elementary school district A couple searching for a single-family detached unit has set a timeline for their search of 6 months, at which point they will renew their current apartment lease. A couple searching for a single-family detached unit has limited their search to be in a specific price range between $350,000 and $400,000.

A couple searching for a single-family detached unit has limited their search to be in a specific price range between $350,000 and $400,000.

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

Considered a fundamental pricing metric in commercial real estate markets, the ratio of a property's annual net 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: real property. real estate operating companies. equity REITs. commercial mortgage backed securities (CMBS).

commercial mortgage backed securities (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

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 developed land

developed 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. developed land. undeveloped land.

developed land

The expected stream of rental income is capitalized into value by converting expected future cash flows into present value through a process called: amortization. discounting. compounding. accounting.

discounting

An example of a real estate asset that trades in the public equity market is: real property. home mortgages. equity REITs. commercial mortgage backed securities (CMBS).

equity REITs.

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 property has unique features, whether it is its age, the building design of its structures, or its location. As such, real estate markets consist of assets that are considered: homogeneous. heterogeneous. substitutes. complements.

heterogeneous

As of 2018, the single largest asset category in the net worth portfolios of households is: government and corporate bonds. stocks and mutual fund shares. deposit and money market funds. housing.

housing

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

A primary determinant of the feasibility of new construction is the relationship between the current level of property prices and the cost of new construction. We would expect the supply of properties to: increase if current property values are greater than the cost of construction. decrease if current property values are greater than the cost of construction. increase if current property values equal the cost of construction. decrease if current property values equal the cost of construction.

increase if current property values are greater than the cost of construction.

Consistently the investment target of pension funds, publicly traded real estate companies, and real estate funds, large commercial properties valued well over $10 million are often referred to as: segmented property. investment-grade property. speculative-grade property. immobile property.

investment-grade property.

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

land

The size of a single family residential lot is typically: less than one acre. between one and two acres. between two and three acres. greater than three acres.

less than one acre

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

If 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

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 sewer system personal property

sewer system

Constraining entry into real estate related occupations, which of the following branches of government is directly involved in establishing rules and regulations for the licensing of professionals in the field of real estate? local government state government national government foreign government

state government

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

streets

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 price appreciation. 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 price appreciation.

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.

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. capital market. property market.

user market