Section 17 TF Quiz

Question 1

Loans for investments generally are charged the same interest rates as for non-investors.

Answer 1

A. True
[A] B. False

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[Section 17C, Slide 64]; Interest rates are increased on loans made for the investment

Question 2

Illiquidity is the ability to convert noncash investments into cash quickly.

Answer 2

A. True
[A] B. False

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[Section 17B, Slides 13 & 14]; This is the definition of liquidity.

Question 3

Liquation analysis is a process unique to business valuations verses regular real estate.

Answer 3

[A] A. True
B. False

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[Section 17D, Slide 46]

Question 4

Equity buildup is when an investor enjoys a gain in equity when he pays down the debt on the property and when the property increases in value due appreciation. This is an advantage of real estate.

Answer 4

[A] A. True
B. False

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[Section 17C, Slide 30]

Question 5

Interest-rate risk is when expenses go up faster than rents can be increased, for example, the investor can actually see decline in the value of their investment funds.

Answer 5

A. True
[A] B. False

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[Section 17C, Slides 62 & 63]; Purchasing-power risk is when expenses go up faster than rents can be increased, for example, the investor can actually see a decline in the value of their investment funds. Interest-rate risk is when the rate that is being charged by a lender outpaces the rents that are being charged to tenants.

Question 6

Even small changes in appreciation can have a large impact on long-term value.

Answer 6

[A] A. True
B. False

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[Section 17A, Slide 71]

Question 7

The fact that the buyers of real estate tend to pull from the local geographic area around a property makes investing in real estate to be viewed as a disadvantage.

Answer 7

[A] A. True
B. False

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[Section 17C, Slide 42]

Question 8

Business brokerages require the same expertise as in regular real estate sales.

Answer 8

A. True
[A] B. False

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[Section 17D, Slide 25]; If a real estate licensee wishes to specialize in business opportunity sales, it is important to become adept in the areas of corporate finance, business accounting, and valuation of businesses.

Question 9

The Rate of Return is the amount of income generated in a year by capital invested, expressed as a percentage of the total sum invested.

Answer 9

[A] A. True
B. False

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[Section 17C, Slide 11]

Question 10

Investment in multi-family housing, such as a duplex, a multiplex, and even large apartment buildings, is an investment in commercial real estate.

Answer 10

A. True
[A] B. False

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[Section 17B, Slides 41 & 42] ; Investment in residential real estate includes single-family and multifamily housing.