IAAO 102 EXAMS TESTBANK 2025-2026
NEWEST VERSION 230+ QUESTIONS WITH
COMPLETE SOLUTIONS
Components of Capitalization Process - RIGHT
ANS✔️✔️Value, Net Operating Income, and
Capitalization Rate
The underlying economic principle of 3
approaches to value - RIGHT ANS✔️✔️substitution
Market Value is also known as - RIGHT ANS✔️✔️
value in exchange
Most probable price the property will sell for in an
arm's- length transaction under normal conditions
on the open market - RIGHT ANS✔️✔️market value
Higher Cap Rate - RIGHT ANS✔️✔️Means Higher Risk
and Lower Overall Value
,Lower Cap Rate - RIGHT ANS✔️✔️Means Lower Rise
and Higher Overall Value
Return of investment aka - RIGHT ANS✔️✔️
Recapture Rate (or getting back the amount
invested)
Return on Investment - RIGHT ANS✔️✔️Overall Yield
Rate (or discount rate; profit realized in addition to
getting back the amount invested)
The nine factors influencing the decisions of
investors - RIGHT ANS✔️✔️Safety, Liquidity, Collateral,
Time, Size, Management, Appreciation, Income Tax
Advantages, Leverage.
Time to convert to actual dollars - CORRECT
ANSWER
✔️Liquidity
,Collateral - RIGHT ANS✔️✔️The entire investment in a
savings account can be used as collateral for a
loan. However, lending institutions generally will
only allow a percentage of the real estates market
value to be used as collateral.
Leverage - RIGHT ANS✔️✔️The borrowing of funds in
hopes of earnings greater return than the cost of
the borrowed funds.
3 types of leverage. - RIGHT ANS✔️✔️Positive negative
neutral
The benefits from borrowing funds exceed the
costs of borrowing. - RIGHT ANS✔️✔️Positive leverage
An investment situation in which the cost of
borrowed funds is exactly equal to the yield
provided by the investment. - RIGHT ANS✔️✔️
Neutral
, occurs when borrowed funds cost more than the
income the funds generate - RIGHT ANS✔️✔️
Negative leverage
Cash, Trust Deed, Land Contract, Mortgages -
RIGHT ANS✔️✔️Four types of real estate financing
Trust Deed - RIGHT ANS✔️✔️a legal instrument
similar to a mortgage that transfers the title of a
property to a trustee. The borrow conveys the title
to a trustee for the benefit of the lender but retains
the right to use and occupy the property. Used to
eliminate the need for a foreclosure proceeding
against the borrower in the event of of a default.
Land Contract - RIGHT ANS✔️✔️aka as contract for
deed or installment sales contract. the purchaser
agrees to pay a small down payment when the
contract is signed with the balance is specified
amounts over the term of the contract.
NEWEST VERSION 230+ QUESTIONS WITH
COMPLETE SOLUTIONS
Components of Capitalization Process - RIGHT
ANS✔️✔️Value, Net Operating Income, and
Capitalization Rate
The underlying economic principle of 3
approaches to value - RIGHT ANS✔️✔️substitution
Market Value is also known as - RIGHT ANS✔️✔️
value in exchange
Most probable price the property will sell for in an
arm's- length transaction under normal conditions
on the open market - RIGHT ANS✔️✔️market value
Higher Cap Rate - RIGHT ANS✔️✔️Means Higher Risk
and Lower Overall Value
,Lower Cap Rate - RIGHT ANS✔️✔️Means Lower Rise
and Higher Overall Value
Return of investment aka - RIGHT ANS✔️✔️
Recapture Rate (or getting back the amount
invested)
Return on Investment - RIGHT ANS✔️✔️Overall Yield
Rate (or discount rate; profit realized in addition to
getting back the amount invested)
The nine factors influencing the decisions of
investors - RIGHT ANS✔️✔️Safety, Liquidity, Collateral,
Time, Size, Management, Appreciation, Income Tax
Advantages, Leverage.
Time to convert to actual dollars - CORRECT
ANSWER
✔️Liquidity
,Collateral - RIGHT ANS✔️✔️The entire investment in a
savings account can be used as collateral for a
loan. However, lending institutions generally will
only allow a percentage of the real estates market
value to be used as collateral.
Leverage - RIGHT ANS✔️✔️The borrowing of funds in
hopes of earnings greater return than the cost of
the borrowed funds.
3 types of leverage. - RIGHT ANS✔️✔️Positive negative
neutral
The benefits from borrowing funds exceed the
costs of borrowing. - RIGHT ANS✔️✔️Positive leverage
An investment situation in which the cost of
borrowed funds is exactly equal to the yield
provided by the investment. - RIGHT ANS✔️✔️
Neutral
, occurs when borrowed funds cost more than the
income the funds generate - RIGHT ANS✔️✔️
Negative leverage
Cash, Trust Deed, Land Contract, Mortgages -
RIGHT ANS✔️✔️Four types of real estate financing
Trust Deed - RIGHT ANS✔️✔️a legal instrument
similar to a mortgage that transfers the title of a
property to a trustee. The borrow conveys the title
to a trustee for the benefit of the lender but retains
the right to use and occupy the property. Used to
eliminate the need for a foreclosure proceeding
against the borrower in the event of of a default.
Land Contract - RIGHT ANS✔️✔️aka as contract for
deed or installment sales contract. the purchaser
agrees to pay a small down payment when the
contract is signed with the balance is specified
amounts over the term of the contract.
