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Question
Duration, as referred to in the chapter, is:A. a measure of the extent to which different investments expose an investor to interest rate risk.
B. a measure of the weighted-average time required before all principal and interest is received on an investment.
C. a measure that takes into account both the size of cash flows and the timing of their receipt.
D. all of the above.
Answer
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Related questions
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You would get the greatest amount of diversification if two securities are
A. positively correlated
B. negatively correlated
C. not correlated
D. perfectly correlated
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Recovery of Capital (or ROC) results in
A. An increase in the dividend available to the investor.
B. An increase in the value of the stock.
C. A reduction in the cost basis of acquired stock.
D. A reduction in losses on the stock.
Q:
Considering the REIT in MC21-3, at the very least what dividend payment must it make to maintain its tax exempt status?
A. $1.90
B. $2.85
C. $3.80
D. $5.70
Q:
A mortgage pass-through bond (MPTB) can be described by all of the following except:
A. anMPTB can be viewed as a mortgage-backed bond with the pass-through of principal and prepayment features of a mortgage pass-through security.
B. most MPTBs are based on residential mortgage pools and are generally overcollateralized.
C. anMPTB represents an undivided equity ownership interest in a mortgage pool.
D. allof the above are true.
Q:
The standard PSA prepayment curve referred to in (TF 18-19) is known as a 1 percent PSA.
Q:
When evaluating an investment in mortgage pass-through securities, several important characteristics of the underlying mortgage pool should be considered. Which of the following is NOT an important characteristic?
A. The amount of overcollateralization of the mortgage pool
B. The geographic distribution of the mortgages
C. The amount of seasoned mortgages included in the pool
D. None of the above are important in the evaluation of mortgage pass-through securities
Q:
Which of the following developments assured mortgage investors that they would receive interest and principal payments at little or no risk?
A. The availability of hazard and title insurance
B. The availability of mortgage default insurance and loan guarantees
C. The development of standardized loan underwriting, processing, and servicing
D. All of the above
Q:
Developers usually holdback about ___ percent of each progress payment.
A. 1
B. 10
C. 25
D. 75
Q:
Which of the following is NOT a benefit to Refinancing?
A. Allows investor to increase financial leverage.
B. It is an alternative to sale of the property.
C. Risk is decreased
D. No taxes have to be paid on funds received by additional borrowing.
Q:
When an investor does an investigation when considering acquisition of a property, this is referred to as:
A. Investigation
B. Risk analysis
C. Due diligence
D. Acquisition analysis
Q:
Which of the following is FALSE concerning Negative Amortization:
A. It can result in a decreases in the borrower's equity in the property
B. It usually increases default risk
C. It usually has a lower interest rate than a conventional loan
D. It usually results in a lower DCR.
Q:
Which of the following is TRUE regarding the incremental Cost of Borrowing :
A. It should be less than the rate for a first mortgage
B. It should be compared to the cost of obtaining a second mortgage
C. It is used to calculate the APR for the loan
D. It is independent of Loan-to-Value Ratio
Q:
Given that every other factor is equal, which of the following ARM will have lowest expected cost?
A. ARM with payment caps and negative amortization.
B. ARM with interest rate caps.
C. ARM with longer Adjustment interval.
D. ARM with no caps or limitations.
Q:
Under which scenario is negative amortization likely to occur? A. A Above.
B. B Above.
C. C Above.
D. D Above.
Q:
Which loan is a FRM? A. Loan 1
B. Loan 2
C. Loan 3
D. Loan 4
Q:
Appraisers use bracketing in order to estimate the upper and lower range of value.
Q:
The capitalization rate is equal to the discount rate minus any expected annual growth in income and property value.
Q:
A building has 12 foot ceilings that cause the electric bill to be $1,200 higher per year. Depreciation caused by the ceilings can be estimated by calculating the present value of the $1,200 per year over the remaining economic life of building.
Q:
What does an appraisal tell about the value of a property?
A. An appraisal calculates value
B. An appraisal confirms value
C. An appraisal estimates value
D. An appraisal determines value
Q:
Which of the following factors is NOT part of the definition of market value?
A. Payment is made in terms of cash in U.S. dollars or a comparable financial arrangement
B. The property has been on the open market for less than a year
C. Buyer and seller are typically motivated
D. Price is not affected by special or creative financing
Q:
Which is not true about Cap rates?
A. Excess supply tends to drive cap rates up
B. Rising interest rates generally tends to lower cap rates
C. Excess demand and falling interest rates results in lower cap rates
D. Excess demand leads to lower cap rates
Q:
What is does an expense stop do in a lease?
A. Stops expenses from increasing
B. Expenses above the stop are paid by the owner
C. Expenses above the stop are paid by the tenant
D. Expenses below the stop are paid for by the tenant
Q:
A clause which requires a tenent in retail space to achieve a certain level of sales of the lease will be terminated is referred to as a
A. Kickout clause
B. Termination clause
C. Option clause
D. Santa clause
Q:
Tax losses cannot be allocated to partners in a syndication.
Q:
Present Value Factor for Reversion of $1 Using only the information above, approximately how much would you pay today for an investment that pays $0 annual interest, but earns 8% interest over the next four years and has a face value at maturity of $13,500?
A. $8,000
B. $9,000
C. $10,000
D. $11,000
Q:
Using only the information above, what would the IRR be for an investment that cost $500 in period 0 and was sold for $750 in period 5?
Present Value Factor for Reversion of $1 A. Between 6% and 7%
B. Between 7% and 8%
C. Between 8% and 9%
D. Between 9% and 10%
Q:
Which of the following statements is true about foreclosure?
A. In judicial foreclosure, property subject to attachment and execution is limited to the mortgaged property
B. If the sale of the mortgaged property realizes a price above the claims of the mortgage and expense of the sale, the balance goes to the mortgagor
C. Redemption can be accomplished by paying 95% of the debt, interest and costs due to mortgage
D. None of the above
Q:
An historical summary of the publicly recorded documents that affect the ownership of a property is know as a(n):
A. Estate
B. Deed
C. Abstract of title
D. Lien
Q:
Which typically is NOT one of the settlement costs that are escrowed over the life of the loan?
A. Property taxes
B. Mortgage insurance
C. Selling commissions
D. Hazard insurance
Q:
One of the following is not tax deductible for homeowners:
A. points in mortgage loans
B. mortgage interest
C. property taxes
D. maintenance expenses