Units 1 - 5 Flashcards
A 45-year-old bachelor has lived in his present home for three years and is planning to sell it. The Taxpayer Relief Act of 1997 provides that he
Answer Choices:
A. Will be exempt from capital gains tax on profit up to $250,000
B. Will be exempt from capital gains tax on profit up to $500,000
C. Is not exempt from capital gains because he has not lived there for five years
D. Is not exempt from capital gains because he must be at least 55 years old
Correct Answer: A. Will be exempt from capital gains tax on profit up to $250,000
Which of the following is NOT a primary market financial institution?
Answer Choices:
A. Commercial bank
B. Savings association
C. Credit union
D. Ginnie Mae
Correct Answer: D. Ginnie Mae
All of the following government programs have the potential to lower a homeowner’s monthly mortgage payment EXCEPT
Answer Choices:
A. The Making Home Affordable program
B. The Home Affordable Modification Program
C. The Dodd-Frank Act
D. The Home Affordable Refinance Program
Correct Answer: C. The Dodd-Frank Act
Long-term cycles in real estate generally run from
Answer Choices:
A. 3 to 5 years
B. 5 to 10 years
C. 10 to 15 years
D. 15 to 20 years
Correct Answer: C. 10 to 15 years
Which of the following would have the LEAST effect on local real estate values?
Answer Choices:
A. Change in zoning to permit higher density
B. New legislation requiring environmental impact studies
C. Decline in the New York Stock Exchange
D. Stricter building codes in that area
Correct Answer: C. Decline in the New York Stock Exchange
All of the following may be used as collateral for a loan EXCEPT
Answer Choices:
A. Tenant’s leasehold rights
B. Lender’s receivable mortgage rights
C. Farmer’s unharvested crops
D. Unsecured personal property
Correct Answer: D. Unsecured personal property
Double-digit interest rates in the 1980s led to all of the following EXCEPT
Answer Choices:
A. Eliminating many participants in the real estate market
B. Creating broad range of creative financing tools
C. Encouraging participation financing between lenders and borrowers
D. Reducing capital gains tax rate
Correct Answer: D. Reducing capital gains tax rate
As a result of the tightened required qualifying standards because of the financial crisis, the predominant lender for low-income mortgage loans is
Answer Choices:
A. Fannie Mae
B. Freddie Mac
C. The Federal Housing Administration (FHA)
D. The Department of Veterans Affairs (VA)
Correct Answer: C. The Federal Housing Administration (FHA)
All of the following are factors that affect the cycles of real estate EXCEPT
Answer Choices:
A. The supply of money for financing
B. Population growth
C. Changes in federal income tax structure
D. The gross national debt
Correct Answer: D. The gross national debt
The focus of lenders shifted in the 1990s to
Answer Choices:
A. Jumbo loans
B. Adjustable-rate mortgages
C. Refinancing existing mortgage loans
D. Variable-payment loans
Correct Answer: C. Refinancing existing mortgage loans
The responsibility for supervising the thrifts has been transferred from the Office of Thrift Supervision to the
Answer Choices:
A. Office of the Comptroller of the Currency (OCC)
B. Federal Deposit Insurance Corporation (FDIC)
C. Federal Home Loan Banks (FHLBs)
D. Federal Housing Administration (FHA)
Correct Answer: A. Office of the Comptroller of the Currency (OCC)
Money can be viewed as all of the following EXCEPT
Answer Choices:
A. A medium of exchange
B. Storehouse of purchasing power
C. Standard of value
D. Measure of personal worth
Correct Answer: D. Measure of personal worth
The purchase and sale of government securities traded on the open market by the Fed is regulated by the
Answer Choices:
A. Office of Thrift Supervision
B. Federal Open-Market Committee (FOMC)
C. Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA)
D. U.S. Treasury Department
Correct Answer: B. Federal Open-Market Committee (FOMC)
A man has an account with a national commercial bank. His account of $98,000 is insured by what insurance fund?
Answer Choices:
A. Federal Deposit Insurance Corporation (FDIC)
B. Fannie Mae
C. Ginnie Mae
D. The Fed
Correct Answer: A. Federal Deposit Insurance Corporation (FDIC)
Nationally chartered commercial banks must join the Federal Reserve System and are required to do all of the following EXCEPT
Answer Choices:
A. Purchase capital stock in a Federal Reserve district bank
B. Maintain required monetary reserves
C. Clear all checks through the system
D. Sell mortgage-backed securities to the Fed
Correct Answer: D. Sell mortgage-backed securities to the Fed
Member banks often borrow on a short-term basis from each other without requiring collateral. The interest charged is called the
Answer Choices:
A. Prime rate
B. Discount rate
C. Federal funds rate
D. Open-market rate
Correct Answer: C. Federal funds rate
The Federal Home Loan Bank System was patterned after the
Answer Choices:
A. Federal Reserve System
B. Farm Credit System
C. Office of Thrift Supervision
D. Federal Deposit Insurance Corporation (FDIC)
Correct Answer: A. Federal Reserve System
Which of the following statements would NOT trigger Regulation Z, requiring full disclosure of all aspects of the financing involved?
Answer Choices:
A. 3 percent down payment
B. 7 percent, no points
C. Low down payment requirements
D. Monthly payments of only $600
Correct Answer: C. Low down payment requirements
The federal agencies empowered to control the supply and cost of money include all of the following EXCEPT
Answer Choices:
A. The Federal Reserve
B. The Department of the Treasury
C. The Office of Thrift Supervision
D. The Federal Home Loan Bank
Correct Answer: C. The Office of Thrift Supervision
Basic functions of the Department of the Treasury include all of the following EXCEPT
Answer Choices:
A. Collecting income tax
B. Paying the country’s bills
C. Insuring depositor’s accounts
D. Prosecuting tax evaders
Correct Answer: C. Insuring depositor’s accounts
