Chapter 2 Quiz: The Real Estate Cycle and the Secondary Market

Question 1

Predatory loan practices include:

a. usury
b. deception
c. fraud
d. all of the above

Answer 1

d. all of the above

Question 2

When the demand for housing increases:

a. it is a buyer’s market
b. prices decrease
c. prices increase
d. prices remain in balance

Answer 2

c. prices increase

• increasing demand signals a seller’s market
• decreasing prices signals a seller’s market
• balanced supply and demand occurs when in equilibrium

Question 3

“Millennials” refers to persons who were born:

a. prior to 1945
b. between 1946 and 1964
c. between 1965 and 1979
d. between 1980 and early 2000s

Answer 3

d. between 1980 and early 2000s

traditionals/silent generation: prior to 1945
baby boomers: 1946-1965
generation x (baby bust): 1965-1979
millennials: 1980-1994
generation z: 1995-2012
generation alpha: 2013-2025

Question 4

The study and description of the population of an area is called:

a. disintermediation
b. demographics
c. demand analysis
d. population analysis

Answer 4

b. demographics

Question 5

FHLC and FNMA are:

a. state agencies
b. primary lenders
c. part of the secondary market
d. regulatory bodies

Answer 5

c. part of the secondary market

Question 6

Pass-through securities pay interest:

a. annually
b. quarterly
c. semiannually
d. monthly

Answer 6

d. monthly

Question 7

Disintermediation is:

a. a loss of savings deposits to higher-paying investments
b. a gain of savings deposits by local lenders
c. mortgage securities sales to investors by the secondary market
d. the sale of mortgages to the secondary market by primary lenders

Answer 7

a. a loss of savings deposits to higher-paying investments
disintermediation: the diversion of savings (through the elimination of an intermediary in a transaction between two parties) from accounts with low fixed interest rates to direct investment in high-yielding instruments

Question 8

The primary market is made up of:

a. lenders such as commercial banks and mortgage companies
b. first time homebuyers
c. federal agencies
d. all of the above

Answer 8

a. lenders such as commercial banks and mortgage companies

…who make mortgage loans directly to borrowers

Question 9

Which of the following is a false statement regarding political regulation and prices in the housing market?

a. Regulation serves to protect consumers from deceptive practices
b. Regulation helps keep housing prices low
c. Regulation increases housing prices
d. Regulation protects health and safety

Answer 9

b. Regulation helps keep housing prices low

Question 10

Which of the following is a government agency?

a. FHLMC
b. FNMA
c. GNMC
d. GNMA

Answer 10

d. GNMA