Accounting
Anthropology
Archaeology
Art History
Banking
Biology & Life Science
Business
Business Communication
Business Development
Business Ethics
Business Law
Chemistry
Communication
Computer Science
Counseling
Criminal Law
Curriculum & Instruction
Design
Earth Science
Economic
Education
Engineering
Finance
History & Theory
Humanities
Human Resource
International Business
Investments & Securities
Journalism
Law
Management
Marketing
Medicine
Medicine & Health Science
Nursing
Philosophy
Physic
Psychology
Real Estate
Science
Social Science
Sociology
Special Education
Speech
Visual Arts
Real Estate
Q:
If Beth make an initial investment of $1,000, how much will it be worth after three years if her average return is 8.25% (use monthly compounding)?
A) $1,268.48
B) $17,354.20
C) $1,279.74
D) $1,020.77
Q:
An investment that costs $105,000 today is expected to produce the following cash inflows over each of the next five years: $20,000; $25,000; $23,000; $22,000; $21,000. What is the IRR (compounded annually) for this investment?
A) 188.6%
B) 18.9%
C) 1.89%
D) −18.9%
Q:
The name for a series of equal, annual cash flows that are received at the end of each period is?
A) Ordinary annuity
B) Annuity due
C) Regular annuity
D) Ordinary annuity due
Q:
Using only the information in the table below, 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?
Present Value Factor for Reversion of $1 Period
6%
7%
8%
9%
10% 1
.943396
.934579
.925926
.917431
.909091 2
.889996
.873439
.857339
.841680
.826446 3
.839619
.816298
.793832
.772183
.751315 4
.792094
.762895
.713503
.708425
.683013 5
.747258
.712986
.680583
.644931
.620921 6
.704961
.666643
.630170
.596267
.564474 A) $8,000
B) $9,000
C) $10,000
D) $11,000
Q:
Using only the information in the table below, 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 Period
6%
7%
8%
9%
10% 1
.943396
.934579
.925926
.917431
.909091 2
.889996
.873439
.857339
.841680
.826446 3
.839619
.816298
.793832
.772183
.751315 4
.792094
.762895
.713503
.708425
.683013 5
.747258
.712986
.680583
.644931
.620921 6
.704961
.666643
.630170
.596267
.564474 A) Between 6% and 7%
B) Between 7% and 8%
C) Between 8% and 9%
D) Between 9% and 10%
Q:
The internal rate of return:
A) Is also known as the investment of investor's yield
B) Represents a return on investment expressed as a compound rate of interest
C) Is calculated by setting the price of an investment equal to the stream of cash flows it generates and solving for the interest rate
D) Can be defined by all of the above
Q:
If an investment earns 12% annually:
A) An equivalent monthly investment would have to earn a higher equivalent nominal rate to yield the same return
B) An equivalent monthly investment would have to earn a lower equivalent nominal rate to yield the same return
C) An equivalent monthly investment would have to earn the same equivalent nominal rate to yield the same return
D) A relation cannot be determined between a monthly and annual investment
Q:
Which of the following is not a basic component of any compounding problem?
A) An initial deposit
B) An interest rate
C) A period of time
D) A net present value
Q:
The future value compound factor given for period (n) at 15%:
A) Would be less than the factor for period (n + 1) at 15%
B) Would be greater than the factor given for period (n + 1) at 15%
C) Would be the same as the factor given for period (n + 1) at 15%
D) Bears no relationship to the factor for period (n + 1) at 15%
Q:
Begin with a single sum of money at period 0. First, calculate a future value of that sum at 12.01%. Then discount that future value back to period 0 at 11.99%. In relation to the initial single sum, the discounted future value:
A) Is greater than the original amount
B) Is less than the original amount
C) Is the same as the original amount
D) Cannot be determined with the information given
Q:
If you saw a table containing the following factors, what kind of interest factor would you be looking at? End of Year 6% 1 1.06000 2 1.12360 3 1.19101 4 1.26247 5 1.33822 A) Present value of a single amount
B) Future value of a single amount
C) Present value of an annuity
D) Future value of an annuity
Q:
The future value of a single deposit of $1,000 will be greatest when this amount is compounded:
A) Annually
B) Semi-annually
C) Quarterly
D) Monthly
Q:
Your friend just won the lottery. He has a choice of receiving $50,000 a year for the next 20 years or a lump sum today. The lottery uses a 15% discount rate. What would be the lump sum amount your friend would receive?
A) $312,967
B) $316,426
C) $500,000
D) $1,000,000
Q:
A deposit placed in an interest-earning account earning 8% a year will double in value in ________ years.
A) 6
B) 8
C) 9
D) 72
Q:
Your friend has a trust fund that will pay him $100,000 at the end of 10 years. Your friend, however, wants his money today. He promises to sign his trust fund over to you if you give him some money today. You require a 20% interest rate on money you lend to friends. How much would you be willing to lend under these terms?
A) $16,151
B) $50,000
C) $80,000
D) $0it would be impossible to earn 20% interest on the loan.
Q:
Ten years ago, you put $150,000 into an interest-earning account. Today it is worth $275,000. What is the effective annual interest earned on the account?
A) 47.99%
B) 6.00%
C) 6.25%
D) 8.33%
Q:
If you deposit $1,000 in an account that earns 5% per year (compounded monthly), what will the balance in the account be at the end of 5 years?
A) $1,272
B) $1,276
C) $1,280
D) $1,283
Q:
The future value of a $1 annuity compounded at 5% annually is greater than the future value of a $1 annuity compounded at 5% semi-annually.
Q:
Assume that an investment, with a single initial cost of $1,000 and a yield of $50 monthly for 10 years, had a 7% IRR in the 60th month and a 7.2% IRR five months later. The IRR can be 6.8% in the 62nd month.
Q:
The internal rate of return is the good feeling you get inside when you earn a return on your investment.
Q:
You always see an ordinary annuity used in business and never see an annuity due used in business.
Q:
The future value of $800 deposited today would be greater if that deposit earned 8% rather than 7.75%.
Q:
Assuming an interest rate of 6%, the present value of $1 that will be received a year from now is $0.75.
Q:
Which of the following documents conveys title to a property at the time the purchaser completes the performance of the obligation called for in the document?
A) Junior mortgage
B) Package mortgage
C) Purchase-money mortgage
D) Land contract
Q:
The term to describe a piece of tangible personal property that is affixed to a property, such that it may be considered part of the property?
A) Cramdown
B) Workout
C) Redemption
D) Chattel
Q:
What term BEST describes the borrower who is personally liable for a debt obligation related to the purchase of a home?
A) Mortgagor
B) Grantor
C) Mortgagee
D) Grantee
Q:
A transaction in which a borrower sells a property for less than the current balance of the loan and then provides all of the proceeds to the sale to the lender, typically in full satisfaction of the loan.
A) Prepackaged bankruptcy
B) Short sale
C) Judicial foreclosure
D) Friendly foreclosure
Q:
A situation in which a borrower agrees to a court's jurisdiction and cooperates with the lender during litigation to resolve the situation:
A) Prepackaged bankruptcy
B) Judicial foreclosure
C) Friendly foreclosure
D) Voluntary conveyance
Q:
When would seller financing NOT be used?
A) The seller desires to take advantage of the installment method of reporting the gain from sale
B) The buyer does not qualify for long term mortgage credit because of low down payment or difficulty meeting monthly payments
C) Third-party mortgage financing is less expensive or easily available
D) The seller desires to artificially raise the price of the property by offering a lower-than-market interest rate on the mortgage
Q:
Which of the following statements is FALSE regarding 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) All of the above
Q:
Which of the following types of default LEAST often results in foreclosure?
A) Failure to fulfill financial obligation
B) Failure to pay taxes
C) Failure to pay insurance premiums when due
D) Failure to keep the security in repair
Q:
Which of the following is NOT an alternative to foreclosure?
A) Restructuring the mortgage loan
B) Transfer of the mortgage to a new owner
C) Redemption
D) Prepackaged bankruptcy
Q:
Which of the following gives the lender the right or option to demand the loan balance owed if a default occurs.
A) Nonrecourse clause
B) Assignment clause
C) Acceleration clause
D) Default clause
Q:
What is usually executed at the same time as a mortgage and creates the obligation to repay the loan in accordance with its terms?
A) Recording acts
B) Ownership interests
C) Method of payment
D) Promissory note
Q:
A mortgage agreement provides the lender with ________ interests.
A) Unsecured
B) Secured
C) Nonpossessory
D) Possessory
Q:
A property is encumbered as follows:
First mortgage, A: $250,000
Second mortgage, B: $40,000
Third mortgage, C: $10,000
How much can mortgagee B pay for the property at a foreclosure sale without having to raise additional funds?
A) $290,000
B) $40,000
C) $300,000
D) $50,000
Q:
A senior mortgage holder is owed a mortgage balance of $140,000 and brings a foreclosure suit which includes all junior claimants in the suit. If the senior mortgage holder purchases the property for $140,000 at the foreclosure sale, what happens to the claim of the junior claimants?
A) The liens of the junior claimants are unaffected and the debt is due upon sale
B) The liens of the junior claimants are extinguished, but the debt owed to the junior claimants is unaffected
C) The liens of the junior claimants and the debt owed to them are extinguished
D) The liens of the junior claimants are unaffected, but the debt owed to them is extinguished
Q:
In jurisdictions where a deed of trust is used to finance real estate, there are three parties to the loan secured by the deed of trust. Which of the following is NOT one of those three parties?
A) Borrower
B) Trustee
C) Holder of the note
D) Grantor
Q:
Which of the following terms refers to an owner's right to redeem a property after foreclosure?
A) Equity of redemption
B) Statutory redemption
C) Attachment
D) Execution
Q:
Which of the following solutions is LEAST likely to be acceptable to a mortgagee when discussing alternatives to foreclosing a property?
A) Permanently extending the amortization period
B) Finding someone else to assume the mortgage
C) Providing a temporary grace period during which principal and interest are not paid
D) Permanently reducing the interest rate
Q:
A mortgage is BEST defined as a legal document that:
A) Creates an obligation to repay a loan under specific terms
B) Names real estate as the security or collateral for the repayment of a loan
C) Defines a possessory interest in real estate
D) Conveys ownership of a property to its purchaser
Q:
Which of the following is NOT a minimum mortgage requirement?
A) Description of the property
B) Covenant of warranty
C) Prepayment clause
D) Covenant of seizin
Q:
Which of the following situations is NOT a common cause for the use of a purchase-money mortgage?
A) The buyer cannot come up with the down payment needed to qualify for a mortgage
B) The seller wants to receive the gain from the sale in installments
C) Third-party mortgage financing is too expensive or unavailable
D) The seller desires to artificially raise the price of the property by receiving a higher-than-market interest rate
Q:
A "short sale" of real estate is:
A) A sale that closes in less than 30 days
B) The sale of a house by someone who is not the owner; it is a way to profit from an anticipated decline in real estate prices
C) A sale in which the proceeds from the sale are less than the balance owed on the loan secured by the property sold
D) A sale in which the balance owed on the loan secured by the property sold is less than the proceeds from the sale
Q:
A loan in which the borrower arranges in advance with a mortgagee for a total amount that will be advanced, in stages, under the mortgage to meet the part of the costs of construction as it progresses:
A) Assumption
B) Non-recourse
C) Open-end
D) Subordination
Q:
A short sale occurs when a buyer does not bring adequate funds to a mortgage closing.
Q:
Unless stated otherwise, the borrower is personally liable for payment of all amounts due under the terms of the note.
Q:
A purchaser at a tax sale receives a deed to the property at the time of the sale in nearly all states.
Q:
If a property encumbered by a mortgage is sold at a foreclosure sale for an amount more than the value of the mortgage, the mortgagor is not obligated to pay the mortgagee the remaining balance.
Q:
Junior liens are eliminated by a voluntary conveyance of a property to the mortgagee.
Q:
When a deed is given in lieu of foreclosure of the mortgage, the mortgagor no longer has an obligation to pay the mortgage note.
Q:
When a purchaser takes a property "subject to" an existing mortgage, the purchaser becomes personally liable for repaying the debt.
Q:
A technical default can result from failure to keep the property in repair.
Q:
It is a federal law that a mortgage must be recorded to be valid.
Q:
A due on sale clause which specifies that the mortgage can accelerate the debt if the property is sold without the mortgagee's permission is a typical clause in a mortgage document.
Q:
Under lien theory, title and the right to possession pass from the mortgagor to the mortgagee when the mortgage is executed.
Q:
A clause which specifies that the mortgagee will obtain and maintain property insurance is typically included in a mortgage.
Q:
A clause which specifies that the mortgagor will pay all property taxes and other charges assessed against the property, even if theses charges have priority over the mortgage is typically included in a mortgage.
Q:
A second mortgage is a junior lien mortgage that is sometimes used to bridge the gap between the price of a property and the sum of the first mortgage and down payment.
Q:
Prepayment of a loan without penalty is a right of all borrowers.
Q:
A non-recourse loan is one in which the borrower is personally liable for payment of all amounts due under the terms of the note.
Q:
A term used to link an individual or entity who owns property to the property itself is:
A) Easement
B) Title
C) Deed
D) Lease
Q:
All other items not considered realty, including intangibles and movable things, are considered as:
A) Realty
B) Contractual
C) Personality
D) An estate
Q:
Which of the following is FALSE concerning Mechanic's Liens?
A) Gives the right to attach a lien on real estate
B) Can get money through forcing judicial sale
C) Lasts even after the bill for labor and materials has been paid
D) Might not be disclosed by the public records
Q:
A reversion and a remainder are similar in that:
A) Both can be sold or mortgaged
B) Both cause the property to go back to the grantor after the sale
C) Neither is an actual interest in the property
D) Neither is considered a future estate
Q:
Which of the following is FALSE regarding a tax sale?
A) An accurate and complete description of the property is required to be posted for possible purchasers before the sale
B) The property owner may not have had a court appearance through due process, thus creating a cloud on the title
C) The line of authority for the sale may not be clear
D) The purchaser is usually expected to pay all delinquent taxes at the time of sale
Q:
A historical summary of the publicly-recorded documents that affect the ownership of a property is known as a(n):
A) Estate
B) Deed
C) Abstract of title
D) Lien
Q:
What legal document conveys title from one person to another?
A) Mortgage
B) Note
C) Deed
D) Title
Q:
Which of the following is NOT a good method of title assurance?
A) Seller provides a warranty in the deed
B) An attorney searches recorded documents
C) Title insurance is purchased
D) Seller provides a quitclaim deed
Q:
What type of estate lasts for an indefinite period of time?
A) Freehold estate
B) Estate from year-to-year
C) Leasehold estate
D) Estate for years
Q:
What term BEST describes a person that owns a property and is conveying title to the property to another person?
A) Mortgagor
B) Grantor
C) Mortgagee
D) Grantee
Q:
Which type of deed offers the grantee the MOST protection?
A) Quitclaim deed
B) Special warranty deed
C) General warranty deed
D) Officer's deed
Q:
Mr. Smith has allowed Mrs. Jones to run a sewer line through Mr. Smith's backyard so that Mrs. Jones has access to the city sewer system. This is an example of a(n):
A) Easement
B) Encumbrance
C) Estate for years
D) Title assurance
Q:
A(n) ________ estate represents the most complete form of ownership of real estate; the owner is free to divide it up into lesser estates and sell, lease, or borrow against them as he or she wishes.
A) Fee simple
B) Freehold
C) Leasehold
D) Life
Q:
If a lender is to repossess or bring about the sale of a property if the borrower defaults on the mortgage loan, the lender is said to have a ________ in the real estate.
A) Freehold interest
B) Lease interest
C) Secured interest
D) Quitclaim
Q:
The grantee typically conveys title to the grantor by means of a deed.
Q:
A lessee is a person who holds the title to a piece of property.
Q:
A lien waiver provides certification that contractor's on newly constructed properties have been compensated.
Q:
A reciprocal easement agreement allows two or more parties to access each other's property.
Q:
After a house is purchased, contractors cannot ask the new owner of the house to pay any bills that were outstanding before the house was sold.