Quizzes 433

Quizzes
Instructions: Quizzes are open book. All answers are multiple choice. Quizzes are
optional and may be taken as many times as you like. Answer key is located on
page 445.

QUIZ 1
Chapters 1.1–2.4
1. Of all the economic factors, __________ has the most impact on the vigor of the California
real estate market.
a. weather
b. employment
c. war
2. The basis for an individual’s __________ is a paycheck, self-employed earnings from a trade
or business, or income from investments.
a. return on investment (ROI)
b. real demand
c. creditworthiness
3. The percentage of the California population who owned their homes peaked in 2006
around:
a. 50%.
b. 61%.
c. 85%.
4. The loss of jobs affects ___________ real estate.
a. only single family residential (SFR)
b. only commercial
c. all types of
5. The two basic categories of interest rates are:
a. long-term and short-term.
b. state and federal.
c. high and low.
6. The U.S. economy functions on a ___________ interest rates cycle.
a. 10-year
b. 15-year
c. 60-year
7. The yield spread is the difference between the 10-year Treasury note rate and the:
a. 6-month Treasury bill rate.
b. 3-month Treasury bill rate.
c. London Inter-Bank Offered Rate (LIBOR).
8. The desired fixed rate of return on the investment in excess of the future rate of inflation is
known as the:
a. return of investment.
b. real rate of return.
c. yield spread premium.
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9. The Buy Phase, the ideal moment for buying property, is characterized by cyclically low
prices and:
a. low interest rates.
b. few willing buyers.
c. Both a. and b.
10. When employment is rising and prices remain low, real estate investors can prepare for a:
a. hold phase.
b. buy phase.
c. sell phase.

QUIZ 2
Chapters 2.5–4.2

1. Lenders will allow no more than __________ of a homebuyer’s monthly gross income to be
used on a monthly mortgage payment.
a. 100%
b. 31%
c. 95%
2. __________ are overnight funds lent to banks with insufficient reserves by the Federal
Reserve (the Fed) and banks with excess reserves.
a. Cost-of-Funds Index
b. Discount rates
c. Federal funds
3. A(n) __________ is a transaction in which sales proceeds are reinvested by acquiring like-
kind property and the profits on the sale are deferred until the investment is cashed out.
a. equity purchase
b. discount transaction
c. §1031 transaction
4. A(n) _____________ refers to a collectible, such as real estate, the value of which may
increase with time beyond the rate of consumer inflation.
a. basket of goods
b. appreciable asset
c. mutual fund
5. A speculator’s delegation of a purchase agreement’s obligations to a substitute buyer is
known as a(n):
a. assumption.
b. right of rescission.
c. waste.
6. When purchasing a residential property from a seller-in-foreclosure, a speculator is subject
to ______________ laws, which protect vulnerable sellers.
a. lemon
b. anti-flipping
c. equity purchase (EP)
 Quizzes 435

7. A buyer other than the mortgage holder who purchases a property for value at a trustee’s
sale without notice of title or trustee’s sale defects is referred to as a(n):
a. equity purchaser.
b. bona fide purchaser (BFP).
c. carryback seller.
8. _______________ is the lost interest which would have been earned by investing income
instead of allocating it to building home equity.
a. Gross operating income
b. Net income multiplier (NIM)
c. Opportunity cost
9. _____________ is the condition which occurs when the market value of real estate is less
than the mortgage which encumbers it.
a. Free-and-clear ownership
b. Negative equity
c. Absorption
10. A_______________ temporarily reduces a homeowner’s mortgage payment, but it does not
permanently alter the mortgage terms.
a. forbearance agreement
b. verbal agreement
c. cramdown

QUIZ 3
Chapters 4.3–6.3
1. Compared to the rest of the nation, the rise and fall in home prices experienced in California
during the years leading up to the Great Recession was:
a. mild.
b. severe.
c. average.
2. Going into 2019, just over ____________ of California’s homeowners were underwater on
their homes.
a. 12%
b. 2%
c. 8%
3. A is a worksheet used to list in dollar amounts all a homeowner’s assets
and liabilities.
a. statement of financial position
b. bankruptcy declaration
c. listing agreement
4. An asset that cannot be converted easily into cash without taking a loss is called a(n):
a. illiquid asset.
b. liquid asset
c. solid asset
5. The dollar amount an owner receives by occupying the space themselves is called:
a. implicit rent.
b. actual rent.
c. the net income multiplier (NIM).
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6. Renters-by-necessity are ___________ to purchase a home.

a. financially unable
b. unwilling
c. Neither a nor b.
7. Agents in urban areas would be wise to consider adding to their title, as demand for
this skill will rise throughout this decade as rentals emerge as significant profit centers.
a. property manager
b. loan officer
c. escrow officer
8. The gross revenue multiplier (GRM) is calculated by dividing the:
a. annual rent a comparable property commands by its operating expenses.
b. cost of the property amenities by the value of the raw land.
c. sale price of a residence by the annual rent it or a comparable property commands.
9. Investment in property aesthetics and the appearance of family stability are types of
favorably associated with owning a home.
a. financial amenities
b. social amenities
c. cultural amenities
10. During the coming decade a buyer will generally need to stay in the property for a
minimum of ___________ years to break even.
a. one or two
b. four or five
c. six or seven

QUIZ 4
Chapters 7.1–7.3
1. A real estate mortgage appears as a on title to a property allowing the lender
to enforce the mortgage by nonjudicial foreclosure.
a. temporary easement
b. trust deed lien
c. property tax assessment
2. The alternative to a real estate loan as a source of additional capital is:
a. speculator activity.
b. seller financing.
c. purchase-assist financing.
3. When an adjustable rate mortgage (ARM) adjusts, the rate of adjustment is based on the
chosen by the lender upon origination
a. teaser rate
b. index
c. short-term rate
4. The share of mortgage loans classified as adjustable rate mortgages (ARMs) reached
at the height of the Millennium Boom.
a. 75%
b. 50%
c. 25%
 Quizzes 437

5. Unlike during the Millennium Boom, the ability to repay rules now require adjustable
rate mortgages (ARMs) to be approved at the after five years from the date of
the first payment.
a. treasury rate
b. teaser rate
c. fully indexed rate
6. An adjustable rate mortgage (ARM) with a shorter introductory period typically has:
a. a lower teaser rate.
b. a higher teaser rate.
c. no teaser rate.
7. The capital adequacy ratio addresses a bank’s level of:
a. liquidity.
b. solvency.
c. payday loans.
8. Pools of mortgage-backed bonds (MBBs) are sold to banking institutions and investors in
a process called:
a. reverse amortization.
b. assumption.
c. securitization.
9. The temporary, low initial interest rate found in adjustable rate mortgages (ARMs) is called
a:
a. teaser rate.
b. sticky rate.
c. short-term rate.
10. Deregulation in the lending industry between 1982 and 2007 permitted and encouraged:
a. reckless lending.
b. responsible lending.
c. less lending.

QUIZ 5
Chapters 8.1–9.2
1. is an increase in the general price level of all goods and services in the
economy.
a. Consumer price inflation
b. Asset price inflation
c. Both a. and b.
2. The Federal Reserve (the Fed) controls inflation by controlling the amount of money:
a. in circulation.
b. held by bankers.
c. held in personal savings accounts.
3. An extreme imbalance in supply and demand is referred to as:
a. disequilibrium.
b. quantitative easing (QE).
c. asset price inflation.
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4. A(n) is able to be used again and again over a long term and is subject to
deterioration and obsolescence.
a. product
b. commodity
c. asset
5. The phenomenon of increasingly larger mortgage amounts due to increasingly inflated
prices of the same collateral is called the:
a. American Dream effect.
b. financial decelerator effect.
c. financial accelerator effect.
6. The Federal Reserve’s (the Fed’s) practice of charging interest on the excess reserves of
lenders to stimulate lending activity is known as:
a. going sideways.
b. going positive.
c. going negative.
7. The liquidity trap is a condition occurring when injections of cash into the banking
system lending and economic growth.
a. fail to stimulate
b. help to increase
c. directly cause
8. “QRM” in the mortgage industry stands for:
a. qualified residential mortgage.
b. quantified reverse mortgage.
c. quick reciprocal monies.
9. When consumer confidence is running high, the rate of personal savings:
a. rises.
b. falls.
c. stays the same.
10. California’s gross domestic product (GDP) is growing than personal incomes.
a. at the same rate
b. slower
c. faster

QUIZ 6
Chapters 10.2–12.4
1. Construction will first begin to blossom in the communities of
where high-tech information and service jobs are increasingly centered.
a. central California
b. the Inland Empire
c. coastal California
2. Homeowner vacancies represent the number of:
a. occupied single family residences (SFRs).
b. unoccupied rental housing units.
c. unoccupied homeowner housing units.
 Quizzes 439

3. When the Millennium Boom began in 2002, rental vacancies:

a. began to fall as more people began leasing rental properties.
b. began to rise as tenants jumped on the homebuying bandwagon.
c. were static and did not significantly vary from prior years.
4. In California, recording a is the first step in the foreclosure process.
a. notice of delinquency
b. notice of nonresponsibility (NODq)
c. notice of default (NOD)
5. The most detailed way to understand home price changes is to view these changes through
a:
a. tiered-home pricing lens.
b. median pricing lens.
c. average pricing lens.
6. The best way to initially evaluate a property and set its price is to study:
a. comparable property values in the same demographic location.
b. the median national property values.
c. comparable property values in a neighboring city.
7. refers to the tendency of listed prices in owner-occupied real estate to resist
change.
a. Comparable pricing
b. Price persistence
c. Median price
8. The excess mortgage debt on a negative equity property is referred to as:
a. debt overhang.
b. replacement cost.
c. loan-to-value (LTV) ratio.
9. The task of property evaluation to qualify a property as collateral for the repayment of a
loan is completed by a(n):
a. broker.
b. appraiser.
c. agent.
10. Roughly of a property’s value comes from its improvements. The
remaining comes from the land it is situated on.
a. 25%; 75%
b. 75%; 25%
c. 50%; 50%

QUIZ 7
Chapters 12.5–15.2
1. Other than during price bubbles, home prices have historically trended with the rate of:
a. consumer inflation.
b. Treasury bills (T-bills).
c. adjustable rate mortgages (ARMs).
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2. The is a simple abstraction used to compare the price of a stock with the
earnings of the company.
a. price-to-earnings (P/E) ratio
b. gross income multiplier (GIM)
c. momentum market multiplier (MMM)
3. Stock market investors look to when they want to invest in income-
property ownership without the liabilities of ownership or property management.
a. passive rental income
b. real estate investment trusts (REITs)
c. price-to-earnings (P/E) ratios
4. Investors in real estate investment trusts (REITs) and other securities are referred to as:
a. shareowners.
b. bona-fide purchasers.
c. speculators.
5. When speculators overvalue stocks, a tends to occur.
a. home price bubble
b. recession
c. stock bubble
6. Due to the savings lost in the Great Recession and financial crisis, many Baby Boomers
anticipate:
a. no retirement.
b. an early retirement.
c. a delayed retirement.
7. Upon retirement, the vast majority of retirees who owned a home will:
a. continue to pursue some form of traditional ownership.
b. rent a unit in a multi-unit dwelling.
c. cohabitate with their children.
8. As individuals approach retirement, their risk tolerance typically:
a. increases.
b. decreases.
c. stays the same.
9. Adult children leaving parents’ households or singles leaving shared housing for their
own property is an example of:
a. financial atrophy.
b. de-leveraging.
c. household formation.
10. Compared to the Baby Boomers (Boomers), Generation Y (Gen Y):
a. finds high-skilled labor and purchases real estate earlier.
b. is taking longer to accumulate the wealth needed to purchase a home.
c. marries and settles down earlier.
 Quizzes 441

QUIZ 8
Chapters 15.3–18.2
1. In the pursuit of higher-education, Generation Y (Gen Y) is raking up unprecedented
amounts of , which is incompatible with mortgage financing standards.
a. job experience
b. income
c. student debt
2. Generation Y (Gen Y) will likely settle in ripe with professional opportunity
and close to areas of cultural significance.
a. rural areas
b. suburban
c. urban areas
3. Buyer purchasing power consists primarily of mortgage interest rates and:
a. annual income.
b. personal savings.
c. Both a and b.
4. With the availability of easy money during the Millennium Boom, bankers had the
impetus to provide mortgage funds to:
a. the same volume of borrowers as prior years.
b. as few borrowers as possible.
c. as many borrowers as possible.
5. When growth slows after an economic boom, this is referred to as a:
a. virtuous cycle.
b. vicious cycle.
c. circular cycle.
6. The Federal Reserve’s (the Fed’s) mandate is to keep our economy stable by
and maintaining both job and price stability.
a. creating legislation to regulate the secondary mortgage market
b. directly setting consumer interest rates charged by private banks
c. maintaining sufficient dollars in circulation
7. The rate on the money private banks pay to the Federal Reserve (the Fed) is called the:
a. discount rate.
b. Glass-Owen Act.
c. rate of inflation.
8. To ensure the central bank would not cater to a particular political interest, the Federal
Reserve (the Fed) was established as District Reserve Banks.
a. 6
b. 24
c. 12
9. The refers to those who lend money or let real estate.
a. rentier class
b. debtor class
c. austerity class
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10. As part of the New Deal after the Great Depression, the government created the
to facilitate economic stimulus.
a. Federal Housing Administration (FHA)
b. central bank
c. Both a. and b.

QUIZ 9
Chapters 19.1–22.2
1. One of the reasons why U.S. property can be such a good investment for an international
homebuyer is due to fluctuating:
a. weather.
b. exchange rates.
c. attitudes towards immigration.
2. Under the principal residence profit exclusion, taxpayers who sell their principal residence
may exclude up to of profit per taxpayer from being taxed.
a. $150,000
b. $200,000
c. $250,000
3. To be eligible for the mortgage interest deduction (MID), homebuyers are required to
finance their purchase with:
a. a mortgage.
b. cash.
c. an adjustable rate mortgage (ARM).
4. As part of the 2018 federal tax changes, the standard deduction roughly:
a. stayed the same.
b. decreased by half.
c. doubled.
5. occurs when taxpayers are shifted into higher income tax brackets,
despite no real increase in income after accounting for inflation.
a. Bracket creep
b. Environmental creep
c. Itemized creep
6. California receives a higher population of net migrants each year than
any other state.
a. tax evading
b. domestic
c. international
7. Demographic information released by the can be used to anticipate
future population-driven real estate sales and leasing trends.
a. U.S. Department of Agriculture
b. U.S. Census Bureau
c. U.S. Military
 Quizzes 443

8. measures the average income per person in a population center and

sets the average amount of money spent by members of the community.
a. Per capita income
b. Net worth
c. Minimum wage rates
9. More highly-educated populations tend to seek out higher-paying employment, which
are mostly available in:
a. higher elevations.
b. lower-density rural areas.
c. higher-density population centers.
10. One type of occurs when retirees remove their wealth from the stock market.
a. “dis-saving”
b. “dis-spending”
c. “dis-buying”

QUIZ 10
Chapters 23.1–25.7
1. The Federal Reserve (the Fed) uses to prevent consumer inflation booms.
a. fiscal policy
b. public policy
c. monetary policy
2. In the aftermath of the financial crisis, numerous new lending regulations were formulated
under the:
a. Truth-in-Spending Act (TISA).
b. Dodd-Frank Wall Street Reform and Consumer Protection Act.
c. Smoot-Hawley Tariff Act.
3. The is in charge of implementing and regulating all consumer protection
rules.
a. Consumer Financial Protection Bureau (CFPB)
b. U.S. Census Bureau
c. U.S. Treasury
4. Any down payment below requires the added expense of mortgage insurance.
a. 3.5%
b. 10%
c. 20%
5. A(n) audit pinpoints existing energy-efficient improvements, and
lists the home’s features in need of energy-efficient improvements.
a. home inspection
b. Energy Star Compliance (ESC)
c. Home Energy Rating System (HERS)
6. Turnover rates are highest when are abundant and employee confidence
in the economy is high.
a. foreclosures
b. jobs
c. bidding wars
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7. The rules limit mortgage funding to homebuyers with the financial ability
to actually repay their debts.
a. ability-to-repay
b. qualified buyer
c. ability-to-do-math
8. Riverside County is an example of a(n) for urban centers like Los Angeles
and San Diego.
a. coastal community
b. vacation spot
c. bedroom community
9. Home sales volume in County is a step ahead of the rest of the state.
a. San Bernardino
b. San Francisco
c. Sacramento
10. Unlike most of California, reached a full jobs recovery, including
regional population growth, in the first quarter (Q1) of 2015.
a. Santa Clara County
b. Los Angeles County
c. Sacramento County
 Quiz Answer Key 445
Quiz Answer Key
Real Estate Economics: Realty Almanac 2019-2021
Quizzes are optional and may be taken as many times as you like.
Please use the quiz answer key provided below to check your answers if you wish to study further for your
exams.
The following are the answers to the quizzes for Real Estate Economics 2017 and the page numbers where they
are located.

Quiz Answer Keys

Page numbers correspond with page numbers in the respective printed book.

Quiz 1 Quiz 2 Quiz 3 Quiz 4 Quiz 5

Ch. 1.1-2.4 Ch. 2.5-4.2 Ch. 4.3-6.3 Ch. 7.1-7.3 Ch. 7.1-9.2
1 B 1 1 B 35 1 B 72 1 B 106 1 A 120
2 C 5 2 C 41 2 B 72 2 B 106 2 A 121
3 B 5 3 C 46 3 A 73 3 B 111 3 A 123
4 C 6 4 B 53 4 B 73 4 A 112 4 C 125
5 A 9 5 A 60 5 A 85 5 C 112 5 C 128
6 C 13 6 C 64 6 A 92 6 A 114 6 C 129
7 B 18 7 B 64 7 A 94 7 B 115 7 A 130
8 B 19 8 C 66 8 C 95 8 C 115 8 A 133
9 C 26 9 B 69 9 B 98 9 A 116 9 B 135
10 B 30 10 A 70 10 C 102 10 A 117 10 C 142

Quiz 6 Quiz 7 Quiz 8 Quiz 9 Quiz 10

Ch. 10.2-12.4 Ch. 12.5-15.2 Ch. 15.3-18.2 Ch. 19.1-22.2 Ch. 23.1-25.7
1 C 158 1 A 197 1 C 249 1 B 291 1 C 353
2 C 161 2 A 200 2 C 251 2 C 305 2 B 355
3 B 164 3 B 204 3 C 254 3 A 306 3 A 355
4 C 166 4 A 206 4 C 260 4 C 310 4 C 357
5 A 170 5 C 213 5 B 263 5 A 311 5 C 360
6 A 173 6 C 222 6 C 266 6 C 326 6 B 375
7 B 174 7 A 226 7 A 268 7 B 338 7 A 383
8 A 175 8 B 231 8 C 268 8 A 341 8 C 392
9 B 183 9 C 240 9 A 274 9 C 341 9 B 410
10 B 192 10 B 243 10 A 282 10 A 345 10 A 419