Saturday, September 28, 2013

Chapter 6: Real Estate Markets

Questions and Answers.

1)      An asset whose value is derived from the value of underlying assets that back it. Example in real estate is mortgage-backed securities and REIT shares.
A-     Efficiency
B-      Disintermediation
C-      Derivative
D-     Equilibrium market price

2)      That most productive use to which a property can be physically and legally dedicated, leading therefore, to its maximum value. It is that use by which the market prices the property.
A)     Situs
B)      Subprime market
C)      Maturity mismatch
D)     Highest and best use

3)      The investment market for whole mortgages and for mortgage-backed securities, as opposed to the primary mortgage market, where mortgages are created between lenders and borrowers.
A)     Mortgage securitization
B)      Mortgage-backed security
C)      Secondary mortgage market
D)     Non above

            T/F questions

4)      The term “Efficiency” is used to describe how quickly transaction prices within a market reflect relevant market information. T/F

5)      “Situs” is the unique location profile of a real estate site, including the quality of its exposure, accessibility to neighboring activities, and infrastructure.T/F

6)      “Mortgage securitization” is 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

7)      The term “Subprime market” is the popular name for that market serving residential mortgage borrowers who do not qualify for standard hence prime mortgages. T/F
8)      A “Free Market” is a market that operates free from governmental or any other outside control; barriers to market participation are nonexistent. T/F

1C, 2D, 3C ,4T, 5T, 6F, 7T, 8T

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