CA Real Estate Finance Course » 2021 » Sec 13 Unit 3 Exam

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Question #1
What's the definition of appreciation?
A.   Paying off a loan over time
B.   An increase in property value
C.   A refinancing strategy
D.   A decrease in property value
Question #2
Gary, your investor client, has an annual net income of $50,000. His annual debt service is $12,500. What is his debt coverage ratio?
A.   0.004
B.   1.4
C.   4.0
D.   4%
Question #3
To calculate capitalization rate, you need to know the property’s value and ______.
A.   Appreciation rate
B.   Age
C.   Expenses
D.   Income
Question #4
An investor is analyzing a three-unit property by looking at its ability to produce future income. Which of the following would most likely be used to determine this value?
A.   Gross rent multiplier
B.   Effective gross income
C.   Potential gross income
D.   Gross income multiplier
Question #5
For which of these properties would gross rent multiplier be calculated?
A.   Condominium building with 20 units
B.   Single-family, owner-occupied home
C.   Duplex used as a rental property
D.   Apartment building with 50 units
Question #6
An increase in property value is called ______.
A.   An anomaly
B.   Appreciation
C.   Depreciation
D.   Amortization
Question #7
Over how many years is a residential income-producing property depreciated?
A.   39 years
B.   40 years
C.   27.5 years
D.   29 years
Question #8
Yanni is an investor who has just purchased a building for $300,000. Similar buildings are returning a rate of 7%. What can Yanni anticipate his annual net operating income to be?
A.   $30,000
B.   $7,000
C.   $21,000
D.   $18,700

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