ASREB (Arizona School of Real Estate and Business) pre-
license Proficiency knowledge test Exam Questions and
certified Answers 2025/2026
20) What are the dimensions of a township?
A. One mile suare
B. Six miles by one mile
C. One mile by one mile
D. Six miles by six miles - correct answer D. Six miles by six miles
21) A tract of land is described as the W 1/2 of the N 1/2 of the NE 1/4 of Section 16.
What is its acreage?
A. 20 acres
B. 40 acres
C. 80 acres
D. 160 acres - correct answer B. 40 acres
22) As an economic product, real estate is uniue because
A. it has appreciation value.
B. the demand must come to the supply.
C. it is uick to respond to supply-demand imbalances.
D. its appeal is predictable. - correct answer B. the demand must come to the supply
23) A critical determinant of commercial and residential property demand in a market is
A. availability of land.
B. employment.
C. existing supply of properties.
D. per capita income. - correct answer B. employment
,24) If rents are declining in office properties in a market, it is likely that
A. unemployment is decreasing.
B. the market is in euilibrium.
C. supply exceeds demand for space.
D. demand exceeds supply of space. - correct answer C. supply exceeds demand for
space.
25) Highest and best use of a property is that use which
A. involves the highest permissible structure and yields the best income.
B. is economically feasible, and gives the developer the best return.
C. is legal, physically and financially feasible, and most productive.
D. complies with the area's master plan and is best for the community. - correct answer
C. is legal, physically and financially feasible, and most productive.
26) A strength of the sales comparison approach to value is that
A. old as well as new sales data may be used in the adjustment process.
B. the approach is based on the principle of substitution.
C. the approach is accurate with uniue, special purpose properties.
D. sale prices can be compared in a neighborhood, since all enjoy the same
approximate rate of appreciation. - correct answer B. the approach is based on the
principle of substitution.
27) A major employer relocates, leaving many homes in an area vacant and
unmaintained. This is an example of
A. physical deterioration.
B. functional obsolescence.
C. incurable economic obsolescence.
D. curable external obsolescence. - correct answer C. incurable economic
obsolescence.
,28) Two important tasks in identifying value through the cost approach are
A. estimating the cost of the land and its accrued depreciation.
B. estimating the value of the improvements and the obsolescence of the land.
C. estimating the cost and depreciation of the land and improvements.
D. estimating the cost of the land and the depreciation of the improvements. - correct
answer D. estimating the cost of the land and the depreciation of the improvements.
29) In evaluating a loan application, a mortgage lender is most concerned about
A. the loan interest rate and loan term.
B. the property location and the amount of the borrower's down payment.
C. the applicant's financial capability and the value of the collateral.
D. the applicant's credit history and background. - correct answer C. the applicant's
financial capability and the value of the collateral.
30) Lenders use the loan-to-value ratio as a guideline in underwriting because
A. the property's value serves to measure the profitability of the loan.
B. the loan amount needs to be less than the property's value.
C. borrowers tend to inflate the true value of the property.
D. a full-price loan overfinances the borrower. - correct answer B. the loan amount
needs to be less than the property's value.
31) In the past, borrowers were often surprised by unexpected financing costs and
charges at closing. This situation has been largely corrected through disclosure
reuirements mandated by which of the following laws?
A. Eual Credit Opportunity Act
B. Truth-in-Lending laws
C. National Disclosure Procedures Act
D. Federal Fair Housing Laws - correct answer B. Truth-in-Lending laws
32) An important function of the secondary mortgage market is to
, A. borrow funds from banks so the banks can make more loans.
B. issue tax certificates and sell them to primary lenders.
C. purchase pools of defaulted loans from lenders to keep them solvent.
D. sell mortgage-backed securities in order to buy pools of loans. - correct answer D.
sell mortgage-backed securities in order to buy pools of loans.
33) The Veteran's Administration assists numerous ualified mortgage loan applicants
because it
A. guarantees loans made by approved lenders.
B. insures loans made by approved lenders.
C. purchases loans made by approved lenders.
D. originates loans made by approved lenders. - correct answer A. guarantees loans
made by approved lenders.
34) A $300,000 loan has monthly interest payments of $2,000. Its annual interest rate is:
A. 4
B. 6%
C. 8%
D. 10% - correct answer C. 8%
35) A lender determines that a homebuyer can afford to borrow $120,000 on a mortgage
loan. The lender reuires an 80% loan-to-value ratio. How much can the borrower pay for
a property and still ualify for this loan amount?
A. $96,000
B. $106,000
C. $150,000
D. $160,000 - correct answer C. $150,000
36) A borrower grosses $4,000 per month and pays $600 monthly for debt obligations.
What monthly payment for housing expenses (principal, interest, taxes, insurance) can
this person afford based on an FHA debt ratio of 41%?
license Proficiency knowledge test Exam Questions and
certified Answers 2025/2026
20) What are the dimensions of a township?
A. One mile suare
B. Six miles by one mile
C. One mile by one mile
D. Six miles by six miles - correct answer D. Six miles by six miles
21) A tract of land is described as the W 1/2 of the N 1/2 of the NE 1/4 of Section 16.
What is its acreage?
A. 20 acres
B. 40 acres
C. 80 acres
D. 160 acres - correct answer B. 40 acres
22) As an economic product, real estate is uniue because
A. it has appreciation value.
B. the demand must come to the supply.
C. it is uick to respond to supply-demand imbalances.
D. its appeal is predictable. - correct answer B. the demand must come to the supply
23) A critical determinant of commercial and residential property demand in a market is
A. availability of land.
B. employment.
C. existing supply of properties.
D. per capita income. - correct answer B. employment
,24) If rents are declining in office properties in a market, it is likely that
A. unemployment is decreasing.
B. the market is in euilibrium.
C. supply exceeds demand for space.
D. demand exceeds supply of space. - correct answer C. supply exceeds demand for
space.
25) Highest and best use of a property is that use which
A. involves the highest permissible structure and yields the best income.
B. is economically feasible, and gives the developer the best return.
C. is legal, physically and financially feasible, and most productive.
D. complies with the area's master plan and is best for the community. - correct answer
C. is legal, physically and financially feasible, and most productive.
26) A strength of the sales comparison approach to value is that
A. old as well as new sales data may be used in the adjustment process.
B. the approach is based on the principle of substitution.
C. the approach is accurate with uniue, special purpose properties.
D. sale prices can be compared in a neighborhood, since all enjoy the same
approximate rate of appreciation. - correct answer B. the approach is based on the
principle of substitution.
27) A major employer relocates, leaving many homes in an area vacant and
unmaintained. This is an example of
A. physical deterioration.
B. functional obsolescence.
C. incurable economic obsolescence.
D. curable external obsolescence. - correct answer C. incurable economic
obsolescence.
,28) Two important tasks in identifying value through the cost approach are
A. estimating the cost of the land and its accrued depreciation.
B. estimating the value of the improvements and the obsolescence of the land.
C. estimating the cost and depreciation of the land and improvements.
D. estimating the cost of the land and the depreciation of the improvements. - correct
answer D. estimating the cost of the land and the depreciation of the improvements.
29) In evaluating a loan application, a mortgage lender is most concerned about
A. the loan interest rate and loan term.
B. the property location and the amount of the borrower's down payment.
C. the applicant's financial capability and the value of the collateral.
D. the applicant's credit history and background. - correct answer C. the applicant's
financial capability and the value of the collateral.
30) Lenders use the loan-to-value ratio as a guideline in underwriting because
A. the property's value serves to measure the profitability of the loan.
B. the loan amount needs to be less than the property's value.
C. borrowers tend to inflate the true value of the property.
D. a full-price loan overfinances the borrower. - correct answer B. the loan amount
needs to be less than the property's value.
31) In the past, borrowers were often surprised by unexpected financing costs and
charges at closing. This situation has been largely corrected through disclosure
reuirements mandated by which of the following laws?
A. Eual Credit Opportunity Act
B. Truth-in-Lending laws
C. National Disclosure Procedures Act
D. Federal Fair Housing Laws - correct answer B. Truth-in-Lending laws
32) An important function of the secondary mortgage market is to
, A. borrow funds from banks so the banks can make more loans.
B. issue tax certificates and sell them to primary lenders.
C. purchase pools of defaulted loans from lenders to keep them solvent.
D. sell mortgage-backed securities in order to buy pools of loans. - correct answer D.
sell mortgage-backed securities in order to buy pools of loans.
33) The Veteran's Administration assists numerous ualified mortgage loan applicants
because it
A. guarantees loans made by approved lenders.
B. insures loans made by approved lenders.
C. purchases loans made by approved lenders.
D. originates loans made by approved lenders. - correct answer A. guarantees loans
made by approved lenders.
34) A $300,000 loan has monthly interest payments of $2,000. Its annual interest rate is:
A. 4
B. 6%
C. 8%
D. 10% - correct answer C. 8%
35) A lender determines that a homebuyer can afford to borrow $120,000 on a mortgage
loan. The lender reuires an 80% loan-to-value ratio. How much can the borrower pay for
a property and still ualify for this loan amount?
A. $96,000
B. $106,000
C. $150,000
D. $160,000 - correct answer C. $150,000
36) A borrower grosses $4,000 per month and pays $600 monthly for debt obligations.
What monthly payment for housing expenses (principal, interest, taxes, insurance) can
this person afford based on an FHA debt ratio of 41%?
