Unit 17 Practice Exam Copy

This is a 15-question quiz. You should strive to get 12 questions (80%) correct. You can find the answers and rationales at the back of this textbook.

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Question 1 of 15

1. Question
Many measures of the appreciation rate of houses are available to consumers. Probably the most important is the one that uses the repeat-sale method called
- median sale price appreciation rates published by the National Association of Realtors®.
- Dow Jones house appreciation rate.
- Case-Schiller Index.
- Bank of America housing report.
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Question 2 of 15

2. Question
What is the term used to describe the ability to sell a property quickly without affecting its market price?
- Equity
- Liquidity
- Illiquidity
- Basis
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Question 3 of 15

3. Question
What is the first real estate purchase made by most Americans?
- Duplex
- Single-family home.
- Condominium.
- Retail property.
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Question 4 of 15

4. Question
The reason for the value declines of large shopping centers is
- higher property taxes.
- online retail sales.
- higher insurance costs.
- excess regulation.
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Question 5 of 15

5. Question
Diminished demand for office space is a trend that started with the
- Covid-19 pandemic.
- high rents in metropolitan areas.
- high levels of property taxes.
- financial crash of 2008.
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Question 6 of 15

6. Question
The major disadvantage of buying agricultural property for speculation is the
- likelihood of toxic waste on the property.
- difficulty in restarting agricultural operations.
- cost to hold the property while waiting for development opportunities.
- greenbelt taxation laws.
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Question 7 of 15

7. Question
Which is NOT an advantage to investing in real estate?
- Liquidity
- Tax advantages
- Hedge against inflation
- Leverage
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Question 8 of 15

8. Question
Tax advantages that come with real estate investment do NOT include the ability to
- deduct depreciation.
- exclude taxes on the gain on sale of investment property.
- exchange for like property without tax consequences.
- use the installment sales reporting to pay taxes as the purchase price is received.
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Question 9 of 15

9. Question
An advantage to real estate investors is the ability to use other people’s money to purchase property, called
- hedge against inflation.
- leverage.
- equity.
- rate of return.
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Question 10 of 15

10. Question
Which is illiquid?
- Cash in the bank
- Stocks
- Cash in your pocket
- Real estate
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Question 11 of 15

11. Question
A disadvantage to investing in real estate is the reliance on industry in the general area. This is because the
- market is local in nature.
- market is national.
- investor needs to pay for management.
- static risk of property.
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Question 12 of 15

12. Question
Dynamic risk can be reduced by
- buying insurance.
- prohibiting certain breeds of dogs.
- hiring security companies.
- careful analysis.
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Question 13 of 15

13. Question
The type of risk associated with the potential that the property value and operating income will not increase proportionately with inflation is called
- business risk.
- market risk.
- liquidity risk.
- purchasing power risk.
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Question 14 of 15

14. Question
A risk that affects general business conditions is
- financial risk.
- liquidity risk.
- market risk.
- risk of default.
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Question 15 of 15

15. Question
The most appropriate approach to valuing a going concern business is the
- cost approach.
- income approach.
- liquidation approach.
- comparable sales approach.
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