Real Estate Study Questions Essay

Words: 2248
Pages: 9

Chapter 1
1. The most probable price which a property will bring in a competitive and open market under all conditions requisite to a fair sale is:
a. transaction price.
b. most probable selling price.
c. market value.
d. investment value.
2. Investment value:
a. is an objective estimate of a property’s worth as an investment.
b. is the value of the property as an investment, and therefore is also the most probable selling price.
c. from the present owner’s perspective sets the upper end of the range of possible transaction prices.
d. is unique to the individual investor and need not be closely related to market value or most probable selling price.
3. The term market value, as generally employed by appraisers, means:
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c. a case of modern working capital management.
d. appropriate only for a short range of investment goals. 12. Real estate investors:
a. may be active or passive investors, depending upon whether they take an equity or a debt position.
b. always depend upon income tax benefits to make the investment successful.
c. are required to exercise stand-by loan commitments.
d. either directly or indirectly, purchase rights to a stream of future cash flows.
13. Real estate is an appropriate investment vehicle:
a. for individuals, but not for institutions such as pension funds and life insurance companies.
b. for institutions such as pension funds and life insurance companies, but not for individuals.
c. for individuals and institutions, depending upon their time horizons and investment goals.
d. for investors in debt instruments but not for investors in equity instruments.
14. Foreign investors:
a. own more than 20 percent of U.S. real estate, but their holdings are widely disbursed across the United States.
b. own a small portion (less than 5 percent) of U.S. real estate.
c. have only recently (within the last decade) become interested in U.S. real estate.
d. are not permitted to own U.S. real estate.
15. The investment decision process:
a. is fundamentally the same for real estate investment analysis as for other investment areas.
b. requires the investor to adjust expected cash flows for timing differences and risk.