Wednesday, February 23, 2011

Chapter 6 Multiple Choice and True/False Questions

Multiple Choice

1) Which of these is not part of the new residential business model?
a) Use this money to buy and lease real estate
b) Use the proceeds from selling mortgages to pay off loan
c) Find someone willing to loan you lots of money
d) Use this money to make loans to people wanting to buy homes

2) A perfectly competitive market must contain all of the following except:
a) Free market
b) Equilibrium market price
c) Product and input mobility
d) Homogenous product

3) Who was most at fault for the Liquidity Crisis of 2008?
a) Loan originators
b) The Clintion Administration
c) The rating agencies
d) Wall Street

1) A market that operates outside of governmental control is known as a free market. T/F

2) The supply/demand conditions and property characteristics including physical qualities, capital improvements and situs that create real estate value in the market for space is known as product and input mobility. T/F

3) A private corporation created by an act of congress to stimulate and maintain the residential secondary mortgage market is known as a government sponsored enterprise (GSE). T/F

4) The popular name for that market serving residential mortgage borrowers who don't qualify for prime mortgages is known as the mortgage market. T/F

5) A derivative asset whose value is supported by a pool of mortgages and whose cash flow is derived from the debt service received from the mortgage pool. T/F

1) a
2) b
3) d

1) True
2) False, Economic Fundamentals
3) True
4) False, Sub-prime market
5) True

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