Real Estate Finance, Sixth Edition Quizzes

Real Estate Finance, Sixth Edition Quizzes Instructions: Quizzes are open book. All answers are True or False, or Multiple Choice. Answer key for the online and CD-ROM book is located on Page 493. Answer key for the printed book is located on page 494. Quiz 1 Chapters 1-5, Pages 13-54 1. The goals, anticipations and positions of lenders and owners of real estate are: a. diametrically opposed. b. adversarial. c. similar. d. a and b. 2. If the wording of a trust deed so states, options to buy, purchase agreements and sales escrows trigger the due-on clause. 3. A signed promissory note is not the debt itself but evidence of the existence of the debt. 4. A promissory note does not need to be secured by use of a security device such as a trust deed. 5. Under a(n), no periodic payments of principal are scheduled; the entire amount of principal is paid in one lump sum. a. adjustable rate note (ARM) b. all-inclusive trust deed note (AITD) c. installment note d. straight note 6. call for periodic adjustments to the interest rate, the amount of scheduled payments, and the principal amount (when a negative amortization is involved). a. Graduated payment (GPM) provisions b. Adjustable rate notes (ARMs) c. Fixed-rate notes (FRMs) d. All-inclusive trust deeds (AITDs) 7. Graduated payment (GPM) provisions are in great demand when interest rates or home prices: a. rise quickly. b. decrease quickly. c. decrease slowly. d. stay constant. 8. Real estate loans made or arranged by an institutional lender or real estate broker are not exempt from usury restrictions. 9. To be enforceable, an agreement to pay money on a future date must be definite and certain in its terms. 10. In the case of a nonrecourse, purchase-money loan or a seller carryback note, the buyer is not personally liable for the debt. 478

Quiz 2 Chapters 6-9, Pages 55-87 1. A promissory note contains a buyer s promise to pay a private lender or carryback seller the: a. principal amount agreed to. b. principal amount agreed to plus any interest. c. interest only. d. none of the above. 2. On a note secured by an owner-occupied, one-to-four unit residential property, a prepayment penalty may be imposed for up to ten years after closing. 3. A penalty on broker-arranged loans for any prepaid principal exceeding of the remaining balance may be imposed for up to seven years after the origination of the loan. a. 5% b. 10% c. 20% d. 25% 4. When a third party signs a note, that third party becomes liable for repayment of the note. 5. A(n) in a note is used to convert a lender s recourse paper into nonrecourse paper. a. exculpatory clause b. choice-of-law provision c. equitable assignment d. guarantee agreement 6. A written modification agreement attached to a promissory note is called an: a. allonge. b. execution. c. forbearance. d. mutual agreement. 7. A(n) occurs when a buyer of real estate is willing to cash out a seller s equity in real estate and assume the existing loan which encumbers the property. a. novation agreement b. cash-to-loan (CTL) transaction c. exculpatory clause d. seller carryback transaction 8. The modification of the interest rate on a carryback note is subject to usury laws. 9. The modification of an existing trust deed note triggers the due-on clause in other trust deeds of record on title to a property. 10. The amount a lender can charge for prepayment of a loan depends on: a. the type of property. b. the owner s use of the property. c. the broker s involvement in negotiations. d. all of the above. 479

Quiz 3 Chapters 10-14, Pages 88-127 1. When real estate law is applied, a lock-in clause becomes a: a. restraint on alienation. b. prepayment penalty. c. promissory note. d. due-on clause. 2. Lock-in clauses are permitted in limited carryback situations when they are necessary to assure installment sales profit tax treatment. 3. Disguised penalty provisions are enforceable. 4. A complete late charge provision must include: a. the span of any grace period following the due date before a payment becomes delinquent. b. the amount of the late charge. c. a requirement for notice from the trust deed holder to impose the late charge and make a demand for its payment. d. all of the above. 5. If a private lender fails to enforce collection of a late charge for any delinquency by a notice and demand for its payments, the lender waives its right to collect a late charge on that payment. 6. On a loan secured by an owner-occupied, single family residence, only one late charge per delinquent payment may be charged regardless of the number of months the payment is delinquent. 7. The dollar amount of the final/balloon payment on a carryback note must be disclosed: a. in a Seller Carryback Disclosure Statement attached to the purchase agreement. b. in a written due date notice delivered between 90-150 days before the final/balloon payment is enforced. c. a and b. d. none of the above. 8. A(n) is any final payment on a note which is an amount greater than twice the amount of any one of the six regularly scheduled payments preceding the date of the final payment. a. call provision b. balloon payment c. due-on clause d. interest payment 9. An owner who places a trust deed lien on his real estate is called a: a. trustor. b. trustee. c. beneficiary. d. creditor. 10. A trust deed gives a beneficiary a security interest in a property, called a: a. mortgage-in-fact. b. lien. c. mutual agreement. d. reconveyance. 480

Quiz 4 Chapters 15-19, Pages 128-165 1. When an owner intends to reconstruct destroyed improvements and restore his property to its original value, a lender cannot automatically refuse to release hazard insurance proceeds to him. 2. A future advances clause in a trust deed allows a lender to: a. pay the premiums on an insurance policy. b. add the premiums paid to the loan balance and demand immediate reimbursement. c. charge an interest rate of 10% on the advance of a premium for insurance coverage. d. a and b. 3. When provisions in a trust deed which encumbers any type of real estate establishes an impound account for payment of taxes and insurance premiums, a beneficiary must: a. reconvey his interest in the property. b. set the amount of the initial deposit and monthly payments for the impound account. c. pay property taxes and insurance policy premiums from the account. d. b and c. 4. A beneficiary can require an owner of any type of real estate to pay an additional amount to cover a deficiency in an impound account. 5. A financial institution making loans secured by one-to-four unit residential property must pay at least 4% interest annually on an impound account. 6. Following a default, a(n) in a trust deed transfers the right to collect rental income from the income producing property to a beneficiary. a. impound account b. land sales contract c. assignment of rents provision d. a and b 7. If a lender enforces an assignment of rents provision, it is obligated to pay reasonable property operating costs on the written demand from an owner until: a. a receiver is appointed. b. the lender ceases to enforce its assignment of rents clause. c. a and b. d. none of these. 8. A court-appointed receiver is never considered the owner-operator of a property for which he is charged with the care. 9. Intentional failure to timely send a beneficiary statement results in a forfeiture by a lender to the person making the request. a. $100 b. $200 c. $300 d. $400 10. A sale-leaseback transaction is not limited by usury laws since it is not considered a loan. 481

Quiz 5 Chapters 20-24, Pages 166-206 1. An equity purchase investor who violates the five-day cancellation period or takes unconscionable advantage of the seller-in-foreclosure is subject to a fine no greater than $35,000 for each violation. 2. For the EP investor to receive the tax benefits of owning real estate, he must limit the leaseback to a periodic tenancy or a tenancy with a fixed date at which time the tenant is to vacate the premises. 3. In times of, lenders seize any event to trigger the due-on clause in order to increase the interest yield on their portfolio. a. falling interest rates b. rising interest rates c. stable interest rates d. none of the above 4. occurs when a broker or attorney assists a buyer or seller to mask the change of ownership from a lender with the primary purpose of avoiding the lender s due-on enforcement. a. Tortious interference with prospective economic advantage b. Adviser due-on interference c. A privileged communication d. Interest differential 5. A lender can enforce its due-on clause and call a loan due on its future discovery of any sale of the secured real estate. 6. A seller is liable for a deficiency on the foreclosure of a purchase-money debt taken over under any procedure by a buyer. 7. Recourse loans are classified as purchase-money loans. 8. A lender can enter into an agreement with both a buyer and a seller for the buyer s assumption of the loan and a release of the seller s liability, called a: a. novation. b. indemnity. c. substitution of liability.. d. a and c. 9. Borrowers under loan programs insured by the Federal Housing Administration (FHA) or Veterans Administration (VA) receive anti-deficiency protection against FHA and VA claims. 10. A security device called a(n) perfects a lien on personal property against later claims. a. UCC-1 Financing Statement (UCC-1) b. UCC-2 Change Form (UCC-2) c. UCC-3 Request for Information Form (UCC-3) d. all of the above 482

Quiz 6 Chapters 25-29, Pages 207-239 1. Seller financing, also called a(n), involves carrying back a note for a portion of the price remaining unpaid after the buyer s down payment. a. installment sale b. credit sale c. a or b d. none of the above 2. A(n) states the exact amount and terms for repayment of a debt a buyer owes to a seller. a. promissory note b. wraparound security device c. trust deed lien d. b and c 3. A seller can reduce his risk of loss and defer profit taxes by using an all-inclusive trust deed (AITD) note. 4. A listing agent can use a(n) to demonstrate the financial risk facing a seller should he have to recover the property on a buyer s default. a. Carryback Foreclosure Cost Sheet b. purchase agreement c. a and b d. none of the above 5. On the transfer of any interest in a property by an owner, a lender has the right on each transfer to: a. accelerate (call) the loan balance of the loan. b. recast the loan. c. increase the interest rate on the loan. d. a and b. 6. To be enforceable, the waiver of a lender s right to call a loan due on a transfer must be in writing. 7. A written carryback disclosure statement is required to be presented to both a buyer and seller for their review and signatures for one-to-four unit residential properties. 8. Carryback disclosure statements are not legally required in carryback transactions creating which do not bear interest or include finance charges. a. straight notes b. adjustable rate notes (ARMs) c. interest only notes d. installment sales 9. Until the carryback disclosure statement is approved by a buyer and seller in a one-to-four unit sales transaction, a(n) exists in favor of the buyer which allows him to cancel the transaction. a. straight note b. trust deed lien c. wraparound security device d. statutory contingency 10. When a broker prepares a carryback financial disclosure statement, he must provide exact dollar figures and may not approximate unknown amounts. 483

Quiz 7 Chapters 30-32, Pages 240-264 1. A listing agent does not have the duty to voluntarily advise a seller of the known risks of a carryback sale. 2. Foreclosure cost calculations are made by an agent and reviewed with a seller when accepting a listing and: a. proposing the listing. b. after a judicial foreclosure. c. presenting an offer. d. upon conclusion of a sale. 3. When the amount of an underlying senior loan is more than of a property s current market value and the buyer defaults on the seller s carryback note, the seller should negotiate with the buyer for a deed-in-lieu of foreclosure. a. 60% b. 65% c. 70% d. 75% 4. occurs when an owner fails to maintain his property. a. Impairment of the security or waste b. The right of redemption c. An unlawful detainer d. b and c 5. If a buyer wiped-out by foreclosure refuses to vacate the property on the expiration of the three-day notice to quit, the carryback seller may proceed with a(n): a. self-help removal of the buyer. b. unlawful detainer (UD) action. c. involuntary bankruptcy petition. d. a and c. 6. Written disclosures itemizing a buyer s credit information are not mandated on all sales involving one-to-four unit residential properties when the seller carries back a portion of the sales price. 7. A buyer s is the total value of his assets minus his total debt obligations, and is on the bottom line shown on a(n). a. expense; operating statement b. negative cash flow; Annual Property Operating Data Sheet (APOD) c. income-to-debt ratio; financial statement d. net worth; balance sheet 8. An all-inclusive trust deed (AITD) is always a junior trust deed, usually a second which is subordinate to a pre-existing trust deed. 9. A(n) occurs when the balance on an all-inclusive trust deed (AITD) sinks below the balance on a wrapped loan. a. crossover b. switch c. inverse order of alienation d. negative gain 10. Two types of all-inclusive trust deeds (AITDs) exist, including: a. equity payoff and partial payoff. b. full payoff and interest payoff. c. equity payoff and full payoff. d. interest payoff and partial payoff. 484

Quiz 8 Chapters 33-35, Pages 265-294 1. The spread between the interest rate on an underlying loan and the all-inclusive trust deed (AITD) note is called: a. margin. b. effective yield. c. balance of the purchase price. d. overriding interest rate. 2. The on a seller s equity in an all-inclusive trust deed (AITD) note is calculated using the principal amount of the underlying trust deed note, the equity amount on the AITD note and the interest rate spread between these two notes. a. effective interest yield b. effective rate of return c. shrinking AITD equity d. net annual interest income 3. A seller s is the total of the interest earned on an all-inclusive trust deed (AITD) minus all interest expenses incurred on a wrapped loan. a. net annual interest income b. effective rate of return c. default interest rate d. lower-than-market interest rate 4. Under an elevated payment note, payments start low and are adjusted upward to maintain the original amortization period. 5. A reverse assumption occurs when a lender agrees to waive its right to call a loan due and consents to an all-inclusive trust deed (AITD) in exchange for a modification of the note by a seller. 6. Land sales contracts, also called, are an alternative form of documentation for a carryback sale. a. lease-option sales b. lease-purchase agreements c. contracts for sale d. contracts for deed 7. were widely used from the late 1960s to the late 1970s as the preferred method for avoiding due-on enforcement by lenders. a. Equitable conversions b. Contract escrows c. Land sales contracts d. Lease-option sales 8. Under a land sales contract, title is conveyed to a buyer when he pays the remaining unpaid amount on the purchase price. a. one-fourth b. one-half c. three-fourths d. all 9. A sale structured as a lease-option is not considered a sale. 10. A(n) is often used to provide recorded protection for a buyer s investment in an otherwise unrecorded transfer, such as one involving a two-step contract escrow. a. IRS 1099-S form b. disguised security device c. reverse trust deed d. ownership interest 485

Quiz 9 Chapters 36-38, Pages 295-314 1. A buyer can obtain a conventional loan from: a. portfolio lenders. b. institutional lenders. c. warehousing lenders. d. all of the above. 2. A prudent buyer should submit loan applications to multiple lenders, even if he is pre-qualified for financing from one. 3. A Real Estate Settlement Procedures Act (RESPA) lender must provide a buyer with: a. a good faith estimate of all loan related charges and the Department of Housing and Urban Development (HUD) published Special Information Booklet. b. IRS Form 4506. c. HUD-1 or HUD-1A closing statement. d. a and c. 4. A buyer s is his ability to make loan payments, as evaluated by his debtto-income ratio. a. willingness b. capacity c. loan-to-value ratio (LTV) d. a and c 5. An owner may not rely on or recover his losses incurred due to the breach of a lender s oral loan commitment. 6. Duplicate charges for integral services, called, are redundant and constantly experienced by the buying and selling public. a. kickbacks b. hidden costs c. customary costs d. a or b 7. Agents acting under their employing broker are prohibited from accepting a fee from any person other than their broker. 8. A(n) loan is a federal loan which establishes a no-service, no-second-fee restriction on brokers and agents. a. Real Estate Settlement Procedures Act (RESPA) b. Truth in Lending Act (TILA) c. Regulation Z d. b and c 9. Real estate brokers and agents are not prohibited from knowingly underestimating lender closing costs. 10. A lender may not amend the loan terms on a Truth in Lending Act (TILA) statement after the statement has been given to a borrower. 486

Quiz 10 Chapters 39-40, Pages 334-355 1. Non-veteran buyers with little cash available for a down payment can buy a home by qualifying for a purchase-assist mortgage insured by the: a. Truth in Lending Act (TILA). b. Federal Housing Administration (FHA). c. Veterans Administration (VA). d. a and b. 2. The most commonly used Federal Housing Administration (FHA) Owner-occupied, One-to- Four Family Home Mortgage Insurance Program is the: a. Section 221. b. Section 223(e). c. Section 203(b). d. Section 251. 3. The maximum Federal Housing Administration (FHA)-insured loan available to assist a buyer in the purchase of a residential property is determined by the county in which the property is located and the type of residential property. 4. is the total of a buyer s wages and salary, including social security, alimony, child support and government assistance, after the payment of taxes. a. Gross effective income b. Adjusted gross income c. Net equity income d. Effective income 5. Loans insured by the Federal Housing Administration (FHA) contain a due-on-sale clause which allows the FHA to accelerate the loan if the property is sold in violation of assumability requirements. 6. The Federal Housing Administration (FHA) can not obtain a money judgment against a homebuyer when the FHA suffers a loss due to the difference between the amount the FHA paid to a lender and the price received from the sale of the property. 7. A real estate lender may require a borrower to obtain and pay the premium for private mortgage insurance (PMI) as a condition for making a trust deed loan. 8. Some lenders and private mortgage insurance (PMI) carriers offer a program in which the lender pays the mortgage insurance premium. a. Guaranteed Payment Mortgage Plan (GPMP) b. Lender-Assist Mortgage Insurance (LAMI) c. Lender-Paid Mortgage Insurance (LPMI) d. Premium-Paid Mortgage Insurance (PPMI) 9. To qualify for private mortgage insurance (PMI), a buyer must: a. be a natural person, not a corporation, partnership or limited liability company. b. take title as the vested owner of the property. c. submit PMI applications to at least two PMI carriers. d. a and b. 10. A buyer will be required to submit for review by a private mortgage insurer. a. a copy of the loan application b. a credit report current within 90 days and covering a minimum of two years c. an appraisal of the real estate to be purchased d. all of the above. 487

Quiz 11 Chapters 41-42, Pages 356-369 1. The amount of interest a private, non-exempt lender can charge a borrower is regulated by the California Constitution and statutes, called: a. interest regulations. b. usury laws. c. limitation clause. d. Article XI. 2. The maximum rate of interest which can be charged on a non-exempt loan secured by real estate is the greater of: a. 5% per year or the discount rate of the Federal Reserve Bank of San Francisco (FRBSF), plus 5%. b. 5% per year or the discount rate of the FRBSF, plus 10%. c. 10% per year or the discount rate of the FRBSF, plus 5%. d. 10% per year or the discount rate of the FRBSF, plus 10% 3. These two classifications of private loan transactions exist relating to interest rates private lenders can charge on real estate loans: a. exempt and brokered. b. exempt and unbrokered. c. brokered and restricted. d. unbrokered and restricted. 4. The Federal Reserve discount rate used to calculate the usury threshold rate for loans agreed to during a particular month is the FRBSF rate for the day of the previous month. a. 1st b. 10th c. 25th d. last 5. The most common penalty suffered by a lender for a usury law violation is the nullifying of all interest on a loan. 6. A salesperson who is employed by a broker and arranges a loan will exempt the loan from usury limitations. 7. Usury laws apply only to a loan or forbearance of money, goods, or contract rights covering chose in action. 8. While the modification of a carryback note on a default convert the debt into a loan and thus the debt is not controlled by usury laws, a loan transaction disguised as a carryback sale subject to usury laws. a. does; is b. does; is not c. does not; is d. does not; is not 9. A private lender cannot exempt his loans secured by real estate from usury interest limitations by becoming licensed as a real estate broker. 10. A carryback note which holds an unconscionable interest rate is enforceable if agreed to by the buyer. 488

Quiz 12 Chapters 43-46, Pages 370-404 1. The California legislature enacted anti-deficiency laws to set a limitation on the amount recoverable as a money judgment for debts secured by real estate. 2. A creditor secured by real estate may obtain a money judgment for a deficiency after the completion of a trustee s sale. 3. An owner s a property by payment of a debt in full is terminated on the completion of a trustee s sale. a. right to reinstate b. right to redeem c. right to foreclose d. right to satisfy 4. Anti-deficiency rules no longer apply to a carryback debt when the debt to the seller becomes secured by real estate other than the real estate sold, called: a. substitution of security. b. exhaustion of the security. c. waiver of the security. d. subordination of the security. 5. A letter of credit is unenforceable if: a. the obligation is secured by a purchase money trust deed on owner-occupied, one-to-four unit residential property. b. it is issued to a trust deed beneficiary to cover a future default on the obligation. c. a and b d. none of the above 6. A(n) in a trust deed authorizes the holder of a note to declare the note immediately due on a material default on the trust deed. a. acceleration clause b. due-on clause c. final/balloon payment d. b and c 7. After a notice of default (NOD) has been recorded, an owner of real estate can bring current any monetary or curable defaults stated in the NOD at any time prior to five business days before the trustee s sale. 8. When an owner fails to meet his obligations regarding the care, use and maintenance of real estate, he is in default under the in the trust deed. a. debt obligation b. due-on sale clause c. waste provision d. b and c 9. A(n) is the court-ordered sale in a judicial foreclosure by public auction of the secured property. a. sheriff s sale b. trustee s sale c. referee s sale d. a and c 10. The court may appoint an appraiser, called a(n), to advise the court on the value of the property. a. fair market value (FMV) indicator. b. probate judge. c. FMV referee. d. probate referee. 489

Quiz 13 Chapters 47-48, Pages 405-431 1. The key to a trust deed holder s ability to nonjudicially foreclose on secured real estate by a trustee s sale is the power-of-sale authority and power-of-sale provision contained in the trust deed. 2. When a trust deed is in default and a foreclosure on the property is required, the beneficiary must deliver a(n) to the trustee. a. trustee s sale guarantee b. Declaration of Default and Demand for Sale c. notice of default d. all of the above 3. A notice of default (NOD) contains a statutorily mandated statement which sets forth the on a note or other obligation secured by the trust deed. a. monetary default b. coverage c. monetary damages d. buyer s current address 4. Any person interested in obtaining a copy of a notice of default (NOD) may record a Request for NOD to assure they will be notified of a default and sale. 5. The first properties sold at a trustee s sale should be those which have not been further encumbered with liens junior to the trust deed being foreclosed, a procedure called: a. reverse order of alienation. b. enforcement of the power-of-sale provision. c. 120 day redemption period. d. inverse order of alienation. 6. A trustee s sale may not be postponed by the trustee at any time or for any reason prior to the completion of the foreclosure sale. 7. Each bid made at a trustee s sale is a(n) to purchase the property. However, any subsequent bid cancels a prior bid. a. irrevocable offer; higher b. irrevocable offer; lower c. revocable offer; higher d. revocable offer; lower 8. Residual funds which exceed the amount of debt foreclosed and remain after a trustee s sale are called: a. interpleader action. b. surplus funds. c. residual equity. d. additional financing. 9. A notice of delinquency will be sent to the person requesting the notice within 10 calendar days after two consecutive months of unpaid and delinquent monthly installments on the senior trust deed note. 10. A(n) assures a junior lienholder he will be notified when a delinquency in installments has existed for more than four months and 15 days. a. Request for Notice of Default (NOD) b. Request for Notice of Delinquency (NODq) c. Declaration of Default (DOD) d. Request for Notice of Trustee s Sale (NOTS) 490

Quiz 14 Chapters 49-52, Pages 432-452 1. A(n) in a lender s trust deed authorizes it to accept partial payments to reinstate a loan without waiving its right to foreclose if a debt remains. a. waiver clause b. non-waiver clause c. reinstatement clause d. final/balloon payment clause 2. Under a(n), an owner of property conveys his property to a carryback seller or lender in exchange for the cancellation of a debt. a. land sales contract b. lease-option sales c. deed-in-lieu d. deed absolute 3. A deed-in-lieu handed to a trust deed holder in advance of a default is voidable by the owner of the property who signed the deed. 4. Commencement of one foreclosure remedy precludes the commencement and completion of another. 5. Attorney fees are collectible in an action for judicial foreclosure: a. on an owner s reinstatement of a note and trust deed prior to the foreclosure decree. b. on completion of the judicial foreclosure. c. five days prior to the completion of the judicial foreclosure. d. a and b. 6. In the instance of a judicial foreclosure, attorney fees are fixed at the notice of default (NOD) fee schedule until entry of the: a. foreclosure fee schedule. b. foreclosure decree. c. future advances provision. d. a and c. 7. Accrued interest paid on a loan, the proceeds of which funded a person s trade or business activities, may be written off as a(n) of the person s business. a. operating expense b. tax deduction c. personal use loan d. itemized deductions 8. Points paid to a lender to originate a loan are considered since points and interest have not yet accrued. a. nominal interest b. life-of-loan accrual c. prepaid interest d. a and b 9. In order to deduct points in the year they are paid, a purchase-assist or improvement loan does not need to be secured by a buyer s or homeowner s principal residence. 10. A loan incurred in connection with the purchase or improvement of a homeowner s principal residence qualifies the points paid to originate the loan for deduction in the year paid. 491

Quiz 15 Chapters 53-55, Pages 453-477 1. To qualify home improvement loans for interest deductions, the new improvements must: a. add to the property s market value. b. prolong the property s useful life. c. adapt the property to residential use. d. any of the above. 2. The proceeds from a home equity loan may only be used to improve a property. 3. To qualify for a home loan interest deduction, a loan must be secured by: a. a principal residence. b. a second home. c. substantial improvements. d. a or b. 4. Interest deductions on home loans are only allowed for interest which has accrued and been paid, called: a. itemized deduction. b. qualified interest. c. adjusted gross income. d. itemized deduction phaseout. 5. If a seller reports a sale as an installment sale on his income tax return, he will defer payment of a significant amount of the profit taxes to a later date. 6. All profit taken on a sale is reported in the year of the sale, unless the profit is: a. excluded, exempt or deferred. b. exempt, equitable or unrecaptured. c. deferred, depreciated or assumed. d. excluded, recaptured or recognized. 7. Taxwise, a seller s goal in an installment sale is to structure the net sales proceeds to produce the highest profit-to-equity ratio possible. 8. The process by which a seller pledges his carryback note as collateral for a loan is called: a. hypothecation. b. reinvestment. c. reverse assumption. d. mortgage over basis. 9. Every debt that is the result of a seller s extension of credit on a sale has an Internal Revenue Service (IRS) of interest. a. imputed interest rate b. periodic payment schedule rate c. return of capital rate d. Applicable Federal Rate (AFR) 10. If the principal amount of a carryback note is greater than the Internal Revenue Service (IRS) accrual threshold, a seller must report interest income each year as the interest accrues without regard for when the payments are received. 492

Answer References for Online and CD-ROM versions The following are the answers to the quizzes for Real Estate Finance, Sixth Edition and the page numbers where they are located. Quiz 1 1. D 14 2. T 27 3. T 38 4. T 38 5. D 39 6. B 41 7. A 41 8. F 43 9. T 45 10. T 46 Quiz 2 1. B 55 2. F 56 3. C 57 4. T 63 5. A 63 6. A 73 7. B 73 8. F 75 9. F 77 10. D 81 Quiz 3 1. A 88 2. T 91 3. F 94 4. D 94 5. T 97 6. T 99 7. C 103 8. B 103 9. A 110 10. B 113 Quiz 4 1. T 129 2. D 131 3. D 136 4. T 137 5. F 140 6. C 143 7. C 148 8. F 148 9. C 156 10. F 165 Quiz 5 1. F 167 2. T 171 3. B 175 4. A 184 5. T 186 6. F 187 7. F 188 8. D 190 9. F 193 10. A 202 Quiz 6 1. C 207 2. A 208 3. T 209 4. A 218 5. D 225 6. T 227 7. T 231 8. A 234 9. D 236 10. F 238 Quiz 7 1. F 240 2. C 243 3. D 243 4. A 245 5. B 245 6. F 248 7. D 255 8. T 257 9. A 259 10. C 261 Quiz 8 1. D 265 2. B 266 3. A 269 4. F 271 5. T 272 6. D 281 7. C 282 8. D 284 9. F 288 10. C 290 Quiz 9 1. D 296 2. T 303 3. D 310 4. B 313 5. T 315 6. D 320 7. T 320 8. A 322 9. F 327 10. F 329 Quiz 10 1. B 334 2. C 334 3. T 336 4. D 340 5. T 341 6. F 345 7. T 346 8. C 347 9. D 354 10. D 354 Quiz 11 1. B 356 2. C 359 3. C 359 4. C 358 5. T 360 6. T 362 7. T 364 8. C 366 9. F 366 10. F 368 Quiz 12 1. T 372 2. F 372 3. B 377 4. A 380 5. C 382 6. A 387 7. T 388 8. C 390 9. A 394 10. D 402 Quiz 13 1. T 405 2. B 410 3. A 411 4. T 414 5. D 417 6. F 418 7. A 422 8. B 424 9. F 426 10. B 430 Quiz 14 1. B 432 2. C 436 3. T 437 4. F 442 5. D 443 6. B 445 7. A 447 8. C 449 9. F 450 10. T 452 Quiz 15 1. D 454 2. F 455 3. D 455 4. B 456 5. T 458 6. A 459 7. F 461 8. A 465 9. D 471 10. T 476 493

Answer References for Printed version The following are the answers to the quizzes for Real Estate Finance, Sixth Edition and the page numbers where they are located. Quiz 1 1. D 04 2. T 14 3. T 25 4. T 25 5. D 26 6. B 26 7. A 28 8. F 30 9. T 31 10. T 32 Quiz 2 1. B 39 2. F 40 3. C 40 4. T 45 5. A 46 6. A 53 7. B 56 8. F 58 9. F 59 10. D 64 Quiz 3 1. A 69 2. T 71 3. F 73 4. D 74 5. T 76 6. T 78 7. C 81 8. B 82 9. A 89 10. B 91 Quiz 4 1. T 106 2. D 107 3. D 111 4. T 112 5. F 113 6. C 117 7. C 121 8. F 121 9. C 128 10. F 136 Quiz 5 1. F 138 2. T 141 3. B 145 4. A 152 5. T 154 6. F 154 7. F 155 8. D 158 9. F 160 10. A 164 Quiz 6 1. C 173 2. A 174 3. T 175 4. A 184 5. D 189 6. T 192 7. T 195 8. A 198 9. D 200 10. F 201 Quiz 7 1. F 203 2. C 205 3. D 206 4. A 208 5. B 208 6. F 210 7. D 216 8. T 218 9. A 220 10. C 221 Quiz 8 1. D 225 2. B 226 3. A 228 4. F 230 5. T 231 6. D 239 7. C 240 8. D 242 9. F 245 10. C 246 Quiz 9 1. D 254 2. T 255 3. D 266 4. B 269 5. T 271 6. D 275 7. T 275 8. A 278 9. F 281 10. F 283 Quiz 10 1. B 287 2. C 287 3. T 289 4. D 291 5. T 294 6. F 296 7. T 297 8. C 298 9. D 304 10. D 304 Quiz 11 1. B 305 2. C 306 3. C 306 4. C 307 5. T 308 6. T 311 7. T 313 8. C 314 9. F 315 10. F 316 Quiz 12 1. T 320 2. F 321 3. B 324 4. A 327 5. C 330 6. A 335 7. T 336 8. C 338 9. A 341 10. D 348 Quiz 13 1. T 351 2. B 355 3. A 356 4. T 358 5. D 362 6. F 362 7. A 364 8. B 367 9. F 369 10. B 372 Quiz 14 1. B 375 2. C 379 3. T 380 4. F 384 5. D 385 6. B 386 7. A 389 8. C 390 9. F 391 10. T 393 Quiz 15 1. D 396 2. F 396 3. D 397 4. B 397 5. T 399 6. A 400 7. F 402 8. A 405 9. D 410 10. T 414 494