Chapter 10 - Money Principles Flashcards
“A tangible or intangible benefit of real estate that enhances its attractiveness or increases the satisfaction of the user.” is definition of __________________
Amenity
Natural amenities may include a pleasant location near water or a scenic view of the surrounding area; man-made amenities include swimming pools, tennis courts, community buildings, and other recreational facilities.
What is Amenity?
Amenity is defined as
“A tangible or intangible benefit of real estate that enhances its attractiveness or increases the satisfaction of the user. Natural amenities may include a pleasant location near water or a scenic view of the surrounding area; man-made amenities include swimming pools, tennis courts, community buildings, and other recreational facilities.”
Explain return OFF your investment, return ON your investment, and liquidity on example of saving account and on example of purchasing a stock
Saving Account
You would be paid interest ON your investment at a comparatively low rate of 1% to 2%.
You could get the return OF your money by withdrawing the original investment ($100,000) at any time
High liquidity (withdrawal any time)
Stock Purchase
The return ON your investment is not guaranteed.
The return OF your investment can be stated as “uncertain.”
The liquidity, however, is fairly good - a few days or so to cash in.
True or False? The burden of managing the investment is one of the reasons why real property investors typically demand higher yields.
True
True or False? Stocks are considered a good investment because the return OF your investment is guaranteed.
False
Which type of purchaser is more likely to pay more attention to the amenities of a property, such as a pool, a horse stable, or a nice view?
- owner-occupant buyer
- investor
- both an owner-occupant and an investor would look at a property exactly the same
owner-occupant buyer
“The efforts by a central bank, such as the Federal Reserve in the United States, to influence the level of economic activity in the country by regulating the availability of money and the rate of interest.” is definition of ___________
Monetary policy
Federal Reserve was founded in (year) _______
1913
“The interaction of buyers and sellers who trade short-term money instruments.” is definition of _____
Money market
“The interaction of buyers and sellers trading long- or intermediate-term money instruments.” is definition of _______
capital market
These are longer than one year and include:
- Mortgages
- Bonds
- Stocks
The FDIC insures deposits up to $______________.
$250,000
Which of the following typically incurs the highest burden of management?
- savings account
- money market
- certificate of deposit
- real estate
real estate
Which investment alternative has the least liquidity?
- savings account
- money market
- certificate of deposit
- real estate
real estate
Which of the following typically generates the lowest return on investment?
- savings account
- money market
- certificate of deposit
- real estate
savings account
The “price” of money is
- its yield
- an interest rate
- change
- its discount rate
an interest rate
The supply of money in the U.S. is regulated by
Federal Reserve
The capital market deals in all of the following EXCEPT
- real estate
- mortgages
- bonds
- stocks
real estate
The Federal Reserve Board consists of ____ members.
7
Who appoints members to the Federal Reserve Board?
They are appointed to 14-year terms by the President of the United States; but, appointees must be confirmed by the U.S. Senate.
Amenities such as a nice view are generally more important to
- investors
- tenants
- homeowners
- landlords
homeowners
The rate that banks employ when lending money to their highest-rated customers is called the __________ rate.
prime
“The Federal Reserve’s efforts to influence the level of economic activity by regulating the availability of money and the rate of interest” is the definition of
monetary policy
Which is NOT a short-term money instrument?
- one year Treasury bill
- one year Treasury Note
- 7 year CD
- 5 year balloon mortgage
5 year balloon mortgage
The interest rate that is charged by the Fed when lending money to banks is called the _______ rate.
discount
