Saturday, March 5, 2011

Chapter 6

Chapter 6
1) The bidding process and the highest and best use pricing mechanism in real estate markets not only allocate sites to users but also allocate uses to sites.
True- pg. 131

2) The speed and ease at which a market finds its equilibrium price is an indication of its inefficiency.
False- pg. 126 Efficiency

3) Both Fannie Mae and Freddie Mac operate their own timely payment guarantee programs.
True- pg.142

4) Subprime markets are in excess of what the market expects given the non-diversifiable investment risks being taken.
False-pg. 124 Extraordinary returns

5) When interest rates go up in the capital market, real estate discount rates, and the prices real estate investors are willing to pay to invest in space also go up.
False-pg.133 Go down

6) The five basics steps for the new business model consist of the following except for:
a) Make loans to people who want to buy loans.
b) Sell these new mortgage loans on the secondary mortgage market.
c) Repeat step one.
d) All of the above-pg.137

7) Which of the following was the second largest bank to close in U.S. history?
a) Bear Sterns-pg.145
b) IndyMac
c) JP Morgan
d) None of the above

8) When the inflation of the 1980s started to accelerate, which of the following occurred except for;
a) Long term rates lagged
b) Operating spreads shrank
c) Aggressive new borrowers were receiving loans-pg.139
d) None of the above

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