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IAAO 112 > 112 > Flashcards

112 Flashcards

1
Q

The appraisal process is a ____ logical method of collecting, analyzing, and processing data into value estimates

A

systematic

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2
Q

Definition of the problem is the ___ step in the appraisal process

A

1st

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3
Q

The ____ of an appraisal is usually to estimate an opinion of a type of value, most often ___ value

A

purpose, market

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4
Q

The type and extent of research and analyses in an appraisal or review assignment is referred to as the ___________

A

scope of work

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5
Q

In order to determine the appropriate scope of work an appraiser must properly ______ to be solved

A

identify the problem

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6
Q

4 tests of HBU

A

legally permissable
physically possible
financially feasible
maximum productivity

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7
Q

Results of deducting expected vacancy and collection losses from PGI, then adding misc income

A

Effective Gross income

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8
Q 
Which capitalization method/s use the IRV equation?
A direct cap
B yield cap
C both
D neither
A

C

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9
Q 
Investment Criteria includes all but:
A Profit
B Risk
C Supplies
D Illiquidity
A

C

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10
Q

Investors are looking for a return ___ and a return ___ their capital

A

of, on

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11
Q 
Which of the following is not a return on rate?
A interest rate
B discount rate
C yield rate
D recapture rate
A

D

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12
Q

The principle of anticipation states that value is the present worth of all ______ future benefits derived from a property

A

anticipated

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13
Q

Leverage is the borrowing of funds in anticipation of earning a ____ return than the cost of the borrowed funds.

A

greater

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14
Q 
Leverage can be all but:
A positive
B prevailing
C negative
D neutral
A

B

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15
Q 
If the overall cap rate is 8%, mortgage constant is 7% and equity cap rate is 11%, leverage is:
A positive
B negative
C neutral
D prevailing
A

A

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16
Q

The normal interest rate is the same as the effective rate only when there is ___ compounding

A

annual

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17
Q

What is the FW of 1 factor for 5 years at an interest rate of 10% compounded annually?

A

1.610510

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18
Q

What is the present value of 5000 that will be received in 10 years assuming 6% interest compounded annually?

A

$2792

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19
Q

An investor will need 15,000 to replace the roof in 6 years. If he can earn 3% on his money compounded annualy, how much must he put away each year?

A

$2319

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20
Q

A buyer would like to borrow 100,000. If interest rates are 6% compounded monthly and a loan term of 15 years can be attained, what will the monthly payments be?

A

843.86

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21
Q

The yield on a loan at 8% compounded monthly is greater than the yield of an 8% loan compounded annually: T or F

A

T

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22
Q 
The effect of lesser fee simple rights had on the sale price should be considered:
A In all cases with jurisdiction
B Never
C Only if value is higher
D Only Retail properties
A

A

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23
Q

An expense ____ is a clause that limits a tenants portion of operating expenses to a certain amount

A

cap

24
Q

An expense ____ is a clause that limits the landlords obligation to pay expenses to a certain amount

A

stop

25
Q 
Property is advertised for rent at $20/sqft annually. The owner offers to enter into a 5 yr lease that provides free rent for the first 6 months. What is the effective rent per sq ft annually for this 5 yr lease?
A 20
B 18
C 22
D 9
A

B

26
Q 
The difference between PGI and EGI is
A Expenses
B taxes
C vacancy and collection losses
D excess rent
A

C

27
Q 
EGI can be forecast for
A only 1 yr
B only past 3 yrs
C multiple years
D none
A

C

28
Q 
if net income changes as follows: 24000, 24720, 25462, 26225, 27012, this is an example of what pattern?
A Constant Ratio-increase
B Constant Ratio-decrease
C straight line
D step-up
A

A

29
Q 
The function to which the appraisal is put is its
A intended use
B Intended user
C purpose
D meaning
A

A

30
Q 
The IRV equation is used in
A cost new estimates
B Behavior capitalization
C Both direct and yield caps
D neither direct or yield caps
A

C

31
Q 
Annualized yield rate on capital that is generated by an asset or within a group of capital assets over a period of ownership is :
A nominal tax rate
B effective tax rate
C internal rate of return
D overall cap rate
A

C

32
Q

__________ are among the best sources of information indicating rates of return for income producing properties

A

Market Surveys

33
Q

The ___________ involves a split rate technique: a speculative risk rate for profit and a safe rate for a sinking fund to account for the recovery of invested capital.

A

Hoskold premise

34
Q 
The mortgage cap rate uses the symbol
A Ye
B Ro
C Yo
D Rm
A

D

35
Q 
Regarding an investment property, the income and value are changing exponentially at a constant ratio. The overall rate Ro is 10% and the constant and the constant rate of change is 2%. What is the indicated yield rate Yo?
A 10%
B 8%
C 12%
D 10.2%
A

Yo=Ro+CR
Yo=10%+2%
12%

36
Q

DCF can measure the worth of ___ income stream

A

any

37
Q 
The symbol Ye represents:
A Overall cap rate
B Equity Yield Rate
C Mortgage Constant
D Building cap rate
A

B

38
Q

The following are ____ cap techniques:

  • derivation from comp sales
  • band of investment with land improvement
  • band of investment with mortgage equity
  • NOI ratio method
  • debt coverage ratio
A

direct

39
Q

_____ capitalization, requires and specifies the following components

  • projection period
  • initial projected net income
  • income pattern and change over the projection period
  • property value change over projection period
  • expected profit or yield
A

Yield

40
Q

Relationship between dollars of tax and dollars of market value

A

effective tax rate

41
Q

If the current level of assessment is 75% and nominal tax rate is 8% what is the effective tax rate

A

E=AT
.75*.08=.06
6%

42
Q

Effective tax rate formula

A

Effective Tax rate= Assessment Rate* Nominal Tax rate

E=AT

43
Q

The % of profit from a real estate investment is

A

Yield rate

44
Q

If a property with a 9% yield rate is expected to produce 10,000 in net income in perpetuity and its market value remains unchanged, what is the overall property cap rate?

A

9%

45
Q 
Formula for a property expected to produce level net income but value is forecast to change 20% over the projection period?
A Ro=Yo-CR
B Ro=Yo-change(1/n)
C Ro=Yo-change(SFF)
D Ro=Yo-change (K factor)
A

C

46
Q 
If property value and net income are forecast to change exponentially at a constant ratio, which model should be used?
A Ro=Yo-CR
B Ro=Yo-change(1/n)
C Ro=Yo-change(SFF)
D Ro=Yo-change (K factor)
A

A

47
Q 
If the income and value are expected to change on a straight line basis at a constant amount, which model should be used?
A Ro=Yo-CR
B Ro=Yo-change(1/n)
C Ro=Yo-change(SFF)
D Ro=Yo-change (K factor)
A

B

48
Q

If income is expected to change exponentially at a different rate than the property value, the ____ can effectively be used to convert the income to a stabilized level equivalent

A

K factor

49
Q

The ___ residual technique assumes the ___ value is known and the building value is unknown

A

building, land

50
Q

The property model Ro=Y-CR is used when ___and ___ are expected to change exponentially (constant ratio).

A

income, value

51
Q

When using the exponential constant ratio model where Yo=9%, CR=4%, and ETR=2%, what is the tax loaded overall cap rate?

A

7%

52
Q

Which technique can be used to value any income pattern?

A

DCF

53
Q

Formula if No change in value or income

A

R=Y

54
Q

Straight line change

A

R=Y-change(1/n)

55
Q

Exponential change formula

A

R=Y-CR

IAAO 112 (1 decks)

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