Chapter 5 - The Real Estate Marketplace

Question 1

1. The scientific study of population statistics is
   a. scientography.
   b. segmentation.
   c. demography.
   d. forecasting.

Answer 1

c. demography.

Question 2

2. The amount initially paid for a good or service is its
   a. price.
   b. market value.
   c. investment value.
   d. cost.

Answer 2

d. cost.

Question 3

3. Market value is based on
   a. insurable value.
   b. most probable price.
   c. cost.
   d. value in use.

Answer 3

b. most probable price.

Question 4

4. Short-term financing instruments are part of
   a. the money market.
   b. the capital market.
   c. the absorption analysis.
   d. the feasibility study.

Answer 4

a. the money market.

Question 5

4. Short-term financing instruments are part of
   a. the money market.
   b. the capital market.
   c. the absorption analysis.
   d. the feasibility study.

Answer 5

b. the capital market.

Question 6

6. Under a deed of trust, the property owner is
   a. the trustor.
   b. the trustee.
   c. the beneficiary.
   d. the reconveyancer.

Answer 6

a. the trustor.

Question 7

7. Under a mortgage, the lender is
   a. the mortgagor.
   b. the mortgagee.
   c. the equity investor.
   d. the reconveyancer.

Answer 7

b. the mortgagee.

Question 8

8. Demand can be broken down into desire and

a. effective purchasing power.
b. availability.
c. gross income.
d. marketing time.

Answer 8

a. effective purchasing power.

Question 9

9. The construction cost to add a new bedroom to a home is $45,000. If the bedroom is added, the value of the property will increase by $30,000. This is an example of
   a. increasing return.
   b. decreasing return.
   c. plottage.
   d. anticipation.

Answer 9

b. decreasing return.

Question 10

10. The return on a similar investment is considered to determine
    a. opportunity cost.
    b. effective purchasing power.
    c. assemblage.
    d. substitution.

Answer 10

a. opportunity cost.

Question 11

11. The most profitable, legally permitted use of land is referred to as its
    a. market value.
    b. value in use.
    c. highest and best use.
    d. market price.

Answer 11

c. highest and best use.

Question 12

12. The life cycle of a neighborhood or property includes
    a. no recognizable pattern, as all neighborhoods and properties are unique.
    b. growth, decline, equilibrium, revitalization.
    c. growth, decline, revitalization, equilibrium.
    d. growth, equilibrium, decline, revitalization.

Answer 12

d. growth, equilibrium, decline, revitalization.

Question 13

13. Explain the difference between market value and sales price.

Answer 13

Market value is an estimate of the worth of a property. Sales price in actual selling price of a property.