45-HR. CA REAL ESTATE PRACTICE COURSE » Summer 2021 » Section 17 Unit 1 Exam

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Question #1
The use of one investment to finance another is called _______.
A.   Pyramiding
B.   Blockbusting
C.   Equity build-up
D.   Churning
Question #2
What is financial risk?
A.   The risk that the property has a bad location
B.   The risk that is directly related to leverage
C.   The risk that the required return on investor capital will not be met
D.   The risk that an investor cannot secure financing at an affordable rate
Question #3
Which of these should tenants keep in mind regarding trade fixtures?
A.   Installation and removal should not cause damage to the property.
B.   They become property of the landlord once installed.
C.   The tenant bears no responsibility when installing trade fixtures.
D.   The tenant bears no responsibility for removing trade fixtures.
Question #4
What is static risk?
A.   The risk that an investor cannot secure financing at an affordable rate
B.   An insurable business risk that includes insuring for accident liability, fire, theft, and vandalism
C.   The risk that is directly related to leverage
D.   An uninsurable business risk resulting from economic, tax, and market changes
Question #5
The risk that an investor cannot secure financing at an affordable rate is called ______ risk.
A.   Financial
B.   Leverage
C.   Capital
D.   Business
Question #6
David owns a commercial building. He’d like to raise some capital for another project, so he sells the property to Gabby (an investor), then leases the space from Gabby. What type of arrangement is this?
A.   Sale leaseback
B.   Subordinate lease
C.   Ground lease
D.   Percentage lease
Question #7
Jason is planning to invest in a new commercial development. He’d like to invest $400,000 and secure another $100,000 through financing. After shopping around, Jason could not find financing at an affordable rate. Of what type of risk is Jason the victim?
A.   Business risk
B.   Capital risk
C.   Financial risk
D.   Leverage risk
Question #8
What type of real estate investment must distribute 95% of its income to beneficiaries?
A.   Real estate investment trust
B.   Real estate mortgage investment conduit
C.   Real estate trust
D.   Real estate syndicate

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