PE02 - Past Exam Nr. 02 - So far only Multiple Choice Questions

Which of the following statements is incorrect?

a) The space market is often called the rental market, while the asset market is often called the property market.

b) The space market is the market for the usage of real property.

c) In the asset market, buyers exchange money with sellers for the use of real estate.

d) Rent refers to the price of the right to use space for a period of time.

e) The characteristics of the space market are Demand and Supply.

c) In the asset market, buyers exchange money with sellers for the use of real estate.

4-Quadrant Model by DiPasquale and Wheaton — Which of the following statements is correct?

a) Quadrant I explains how rents are determined in the asset market.

b) Quadrant II explains how properties are valued in the asset market.

c) Quadrant III explains how new construction is related to the existing space of stock.

d) Quadrant IV explains what determines the amount of new construction.

e) None of the above statements is correct.

b) Quadrant II explains how properties are valued in the asset market.

Which of the following statements is correct?

a) Mortgage Backed Securities (MBS) are Debt Assets that are traded on Public Markets.

b) REITs are Equity Assets that are traded on Private Markets.

c) Real Properties are Equity Assets that are traded on Public Markets.

d) Mortgages are Debt Assets that are traded on Public Markets.

e) None of the above statements is correct.

a) Mortgage Backed Securities (MBS) are Debt Assets that are traded on Public Markets.

Question 4

Which is the correct assignment for the graphic below?

a) 1 = Demand Curve; 2 = Supply Curve; 3 = Equilibrium Price; 4 = Equilibrium Stock of Space; 5 = Price/Rent; 6 = Quantity of Space

b) 1 = Supply Curve; 2 = Demand Curve; 3 = Equilibrium Price; 4 = Equilibrium Stock of Space; 5 = Price/Rent; 6 = Quantity of Space

c) 1 = Supply Curve; 2 = Demand Curve; 3 = Equilibrium Stock of Space; 4 = Equilibrium Price; 5 = Quantity of Space; 6 = Price/Rent

d) 1 = Demand Curve; 2 = Supply Curve; 3 = Equilibrium Stock of Space; 4 = Equilibrium Price; 5 = Quantity of Space; 6 = Price/Rent

e) 1 = Supply Curve; 2 = Demand Curve; 3 = Equilibrium Price; 4 = Equilibrium Stock of Space; 5 = Quantity of Space; 6 = Price/Rent

Answer: d)

1 = Demand Curve

2 = Supply Curve

3 = Equilibrium Stock of Space

4 = Equilibrium Price

5 = Quantity of Space

6 = Price/Rent

Question 5

Which of the following statements is correct?

a) Different tranches of the securities have different return profiles but the same risk profile.

b) A mortgage-backed security is secured by the reputation of the borrower.

c) The interest and principal payment from the borrower pass through to the security holder.

d) Commercial mortgage-backed securities are backed by a pool of commercial mortgages and residential mortgages.

e) The first lost is associated with the lowest risk and the highest expected yield.

c) The interest and principal payment from the borrower pass through to the security holder.

Question 6

Which of the following statements is correct?

a) The coefficient of determination is the proportion of the variance explained by the regression model with respect to the total variance of the observations.

b) The value of the adjusted coefficient of determination is always greater than the value of the coefficient of determination.

c) If the coefficient of determination is 1, all residuals are also 1.

d) If the coefficient of determination is 0, all regression coefficients have a value different from 0.

e) None of the above statements is correct.

Answer: a) The coefficient of determination is the proportion of the variance explained by the regression model with respect to the total variance of the observations.