Tuesday, March 8, 2011

Chpt 6-Cheyenne Ison

1. All of the following are examples of a perfectly competitive market except...
A. Free Market
B. Product and Input mobility
C. Perfect Knowledge
D. Heterogeneous Products

Answer is D. Perfectly Competitive Markets have Homogeneous products not Heterogeneous.

2. The process of creating mortgage-backed securities is known as:
A. Disintermediation
B. Situs
C. Mortgage Securitization
D. Maturity Mismatch
Answer: C-Mortgage Securitization

3. All of the following are steps in the New Residential Mortgage Business Model except:
A. Find someone willing to loan you lots of money.
B. Use this money to make loans to people wanting to buy homes.
C. Sell these new mortgage loans on the secondary mortgage market.
D. Use the proceeds from selling mortgages to buy new mortgages.
Answer: D- it is use the proceeds from selling mortgages to pay off your big loan.

1. The secondary mortgage market creates mortgages between lenders and borrowers.
Answer: False-definition is of primary mortgage

2. Highest and Best Use is the most productive use to which a property can be physically and legally dedicated leading therefore to its maximum value.
Answer: True

3. Average returns are known as investment returns that are in excess of what the market expects given the non-diversifiable investment risks being taken.
Answer: False-known as Extraordinary returns

4. Derivative is an asset whose value is derived from the value of underlying assets that back it.
5. The unique locational profile of a real estate site including the quality of its exposure and accessibility to neighboring activities and infrastructure is known as situs.

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