Chapter 1 - California's Diversity

Question 1

The increase in value of an asset over time. An increase in the worth or value of property or real estate.

Answer 1

Appreciation

Question 2

An economic system in which most of the economy’s resources are privately owned.

Answer 2

Capitalism

Question 3

The process that can be employed to convert income to value.

Answer 3

capitalization

Question 4

The rate of return considered to be a reasonable return on investment given the risk. – The rate of interest which is used in the process of determining value based upon net income. It may also be described as the yield rate that is necessary to attract the money of the average investor to a particular kind of investment.

Answer 4

Capitalization Rate

Question 5

Goods sold or purchased primarily for personal, family, or household purposes.

Answer 5

consumer goods

Question 6

In close proximity.

Answer 6

Contiguous

Question 7

Information from a variety of sources used to create a broad profile of any community.

Answer 7

Demographics

Question 8

The statistical study of human populations.

Answer 8

demography

Question 9

A rate of return, stated as a percent, used to derive a value opinion from the anticipated net operating income a property could generate. It is used for direct capitalization in the income approach.

Answer 9

Direct Capitalization Rate

Question 10

Land grants recorded by the Mexican government in California.

Answer 10

Expedients

Question 11

The price negotiated for a parcel of real estate in a competitive market where both buyer and seller are free to act and under no undue pressure.

The price the property would bring if freely offered on the open market with both a willing buyer and a willing seller.

Answer 11

fair market value

Question 12

A large migration of people to a newly discovered gold field.

Answer 12

gold rush

Question 13

A temporary buydown plan where payment subsidies, usually from a seller or developer, in the early years of the loan keep payments low, but payments increase each year until they’re sufficient to fully amortize the loan.

Answer 13

Graduated Payment Buydown

Question 14

The measure of goods and services produced by the nation during any one calendar year.

Answer 14

gross domestic product

Question 15

The total value of all goods and services produced in an economy during a given period of time.

Answer 15

gross national product (GNP)

Question 16

Housing units that are available for sale or in the process of being made ready for sale.

Answer 16

housing inventory

Question 17

An increase in the cost of goods or services, or too many people wanting too few goods.

Answer 17

Inflation

Question 18

Quasi-political districts created under special laws to provide for water services to property owners in the district; an operation governed to a great extent by law.

Answer 18

irrigation districts

Question 19

Formula Name - A simple calculation for finding the net operating income (I), the capitalization rate (R), or the value (V) of an investment property. When any two factors are known, the third can be determined. Also called Capitalization Rate Formula.

Answer 19

IRV Formula

Question 20

The price that is middle value of a sample of sales with one-half of the sales below and one-half of the sales above this home price.

Answer 20

median home price

Question 21

A large densely populated metropolitan area consisting of a number of major urban areas and smaller surrounding cities.

Answer 21

Megalopolis

Question 22

The value of all assets minus all liabilities.

Answer 22

net worth

Question 23

The percentage of the people classified as unemployed as compared to the total labor force.

Answer 23

unemployment rate