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.   Blockbusting
B.   Equity build-up
C.   Pyramiding
D.   Churning
Question #2
What is financial risk?
A.   The risk that the required return on investor capital will not be met
B.   The risk that the property has a bad location
C.   The risk that an investor cannot secure financing at an affordable rate
D.   The risk that is directly related to leverage
Question #3
Which of these should tenants keep in mind regarding trade fixtures?
A.   The tenant bears no responsibility when installing trade fixtures.
B.   Installation and removal should not cause damage to the property.
C.   The tenant bears no responsibility for removing trade fixtures.
D.   They become property of the landlord once installed.
Question #4
What is static risk?
A.   An uninsurable business risk resulting from economic, tax, and market changes
B.   The risk that an investor cannot secure financing at an affordable rate
C.   An insurable business risk that includes insuring for accident liability, fire, theft, and vandalism
D.   The risk that is directly related to leverage
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.   Subordinate lease
B.   Percentage lease
C.   Ground lease
D.   Sale leaseback
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.   Financial risk
B.   Capital risk
C.   Business risk
D.   Leverage risk
Question #8
What type of real estate investment must distribute 95% of its income to beneficiaries?
A.   Real estate syndicate
B.   Real estate mortgage investment conduit
C.   Real estate investment trust
D.   Real estate trust

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