REE 3043 Real Estate Analysis Finals Exam (Qns & Ans)
2025.
Ratio analysis:
Serves as an initial evaluation of the adequacy of an investment's expected cashflows
In determining a property's before-tax cash flow from operations (BTCF) and net
operating income (NOI), it is important to understand how each accounts for the use of
financial leverage in its calculation. Which of the following statements is true in regards
to how these two measures account for the use of financial leverage?
BTCF is a levered cash flow, while NOI is an unlevered cash flow
BTCF =
NOI - Debt Service
NOI is income before debt service, so it represents
the unleveraged cash flow
BTCF is after debt service, so it represents
the leveraged cash flow
Conventional conforming loans are loans that
, Are eligible for purchase by Fannie Mae and Freddie Mac
Private mortgage insurance (PMI) premiums vary with the perceived riskiness of the
loan. Which of the following scenarios would result in a higher premium? In other
words, which of the following describes a higher risk loan?
A "cash-out" refinancing loan
It would be hard to overstate the importance of the Federal Housing
Administration(FHA) in the history of housing finance. Which of the following loan
programs created by the FHA is considered the single most important financial
innovation in modern housing finance?
30-year level-payment, fully amortizing loan
Mortgage originators can either hold loans in their portfolios or sell them to investors.
When a mortgage originator decides to sell mortgages to another institution, this
transaction occurs in what is commonly referred to as the:
Secondary mortgage market
We have an expert-written solution to this problem!
With a mortgage backed security (MBS) issued by one of the government sponsored
enterprises (GSEs), Fannie Mae and Freddie Mac, the issuing GSE retains the _____ risk
while the MBS investor faces the ______ risk?
Credit, Prepayment
MBS investors face...
prepayment and market risk
2025.
Ratio analysis:
Serves as an initial evaluation of the adequacy of an investment's expected cashflows
In determining a property's before-tax cash flow from operations (BTCF) and net
operating income (NOI), it is important to understand how each accounts for the use of
financial leverage in its calculation. Which of the following statements is true in regards
to how these two measures account for the use of financial leverage?
BTCF is a levered cash flow, while NOI is an unlevered cash flow
BTCF =
NOI - Debt Service
NOI is income before debt service, so it represents
the unleveraged cash flow
BTCF is after debt service, so it represents
the leveraged cash flow
Conventional conforming loans are loans that
, Are eligible for purchase by Fannie Mae and Freddie Mac
Private mortgage insurance (PMI) premiums vary with the perceived riskiness of the
loan. Which of the following scenarios would result in a higher premium? In other
words, which of the following describes a higher risk loan?
A "cash-out" refinancing loan
It would be hard to overstate the importance of the Federal Housing
Administration(FHA) in the history of housing finance. Which of the following loan
programs created by the FHA is considered the single most important financial
innovation in modern housing finance?
30-year level-payment, fully amortizing loan
Mortgage originators can either hold loans in their portfolios or sell them to investors.
When a mortgage originator decides to sell mortgages to another institution, this
transaction occurs in what is commonly referred to as the:
Secondary mortgage market
We have an expert-written solution to this problem!
With a mortgage backed security (MBS) issued by one of the government sponsored
enterprises (GSEs), Fannie Mae and Freddie Mac, the issuing GSE retains the _____ risk
while the MBS investor faces the ______ risk?
Credit, Prepayment
MBS investors face...
prepayment and market risk
