RE 165 Real Estate Economics Due 5/17/2012 s1

RE 165 Real Estate Economics Due 5/17/2012

Quiz for Chapter 18: APPLIED REAL ESTATE ECONOMICS

1. The city council’s unanticipated rezoning of an area to a lower density reduces the value of a property. This is an example of a(n):

A. social force

B. political force

C. economic force

D. physical force

2. A “what if” approach that anticipates the impact of various changes on an investment is a(n):

A. sensitivity analysis

B. cash flow analysis

C. economic analysis

D. fail-safe analysis

3. The first step in the scientific method is to:

A. collect the data

B. form the hypothesis

C. analyze the data

D. define the problem

4. A formal study of the profitability of various alternative uses for a vacant parcel of land is called a:

A. “what if” analysis

B. sensitivity analysis

C. feasibility study

D. critical path study

5. A real estate project is considered to be economically feasible only when:

A. all operating costs are covered

B. invested capital is not at risk

C. one hundred percent occupancy is anticipated

D. there is an adequate rate of return for investors and adequate profit for the entrepreneur

6. The main reason that an investor should study real estate trends and cycles is to help estimate a property’s:

A. potential for bankruptcy

B. demographic characteristics

C. physical feasibility

D. future earnings

7. Sensitivity analysis refers to a property’s:

A. reaction to possible change

B. expense ratio

C. position on the real estate cycles

D. future earnings

8. A cycle differs from a trend in that a cycle:

A. is a projection of the past into the Future

B. consists of recurring regular changes

C. involves long-term shifts in the same direction

D. cannot be forecast

9. Changing economic events, social attitudes, physical events, and political actions are important considerations for real estate analysts.

A. true

B. false

10. The real estate analyst studies past cycles and trends because history always repeats itself.

A. true

B. false

11. The investor asks “what if” questions in order to:

A. explore how sensitive an investment is to change

B. identify issues that should be studied

C. identify which issues can be ignored

D. all of the above

12. An appraisal estimates the market value of a property, whereas an investment analysis estimates if the property is “right” for the particular investor.

A. true

B. false

13. The best investment is the one with the:

A. lowest price

B. best location

C. best building

D. most profit potential for the price

14. Highest and best use refers to:

A. the use with the least sensitivity to change

B. the allowable use with the greatest physical density

C. the legal use that generates the most land value

D. the use with the strongest market demand

15. The scientific method:

A. is a formal process for decision making

B. depends on the availability of statistically valid data

C. is the same as cash flow analysis for real estate investors

D. shows how to examine the emotional aspects of real estate investing