FIN 331 Real Estate
Phase 3 Exam
Chapters 11, 13, 15, 18, 19, 20, 22
Fall 2015
Phase 3 Exam
A. 50 Questions
1. 13 Problems:
a. Mortgages: EBC, Lender’s Yield, Monthly
payment, amortization schedule, Loan-to-Value
ratio, Service Fee, Housing Expense Ratio, Total
Debt ratio.
b. Commercial Property: Operating Expense ratio,
Net Income Multiplier, Effective Gross Income
Multiplier, Capitalization rate, Net Present Value
2. 37 Multiple choice.
Chapter 11
A.
B.
C.
D.
E.
F.
Role of Mortgage Bankers, Brokers
Why are Loan Servicing fees important?
What is Pipeline Risk?
What is involved in Loan Underwriting?
Why are FICO scores important?
Compute: Housing Expense Ratio, Total
Debt Ratio
Chapter 13
Contracts for Sale and Closing
A. What are the basic requirements for a RE
contract?
B. What does it mean to have a power of
attorney?
C. What form is required by the RESPA?
D. What is earnest money?
E. What is meant by constructive notice?
F. Describe/Define: Specific performance,
Consideration, Equitable title, Contingency
Chapter 15
Mortgage Cost Calculations
A. What costs must be considered in computing the
APR required by the TILA?
B. How do points affect the lender’s yield?
C. What is one criteria for selecting a mortgage?
D. What are balloon payments? How do they affect
monthly mortgage payments?
E. How do adjustable rate mortgages work?
F. Be able to compute: max borrowing amount,
monthly payments, lender’s yield, Effective
Borrowing costs, balances.
Chapter 18
Investment Decisions: Ratios
A. Know what is meant by;
1.
2.
3.
4.
5.
Operating Expense Ratio
Loan-to-Value Ratio
Debt Coverage ratio
Net Income Mult., Effective Gross Income Mult.
Capitalization Rate
B. Why do real estate investors prefer using
leverage?
C. How does above the line and below the line
treatment of CAPEX affect NOI?
Chapter 19
Investment Decisions: NPV and IRR
A. RE investments are subject to the same
value analysis as other types of
investments: Net Present Value
1. What are the decision rules for NPV?
2. How does leverage affect ROE?
3. Computing NPV
Chapter 20
Income Taxation and Value
A. What are the two basic types of taxes
imposed by governments?
B. Which form is business organization is best
for minimizing tax liabilities?
C. What are the four types of real estate? Which
ones can be depreciated?
D. What are the three types of income subject
to Federal Taxation?
E. How are capital expenditures treated?
F. Why are like-kind exchanges important?
Chapter 22
Leases and Property Types
A. What are some of the essential elements
in a lease agreement?
B. What is an anchor tenant?
C. When does a tenant get quiet enjoyment?
D. How are commercial rents quoted?
E. What is a graduated rent?
F. When would a tenant most likely get a
concession?