Question

1) Which of the following is not true for a 5/1 Adjustable Rate Mortgage (ARM).

A) is a mortgage in which the rate is adjustable for 5 years

B) in the sixth year, the loan becomes an ARM

C) the new rate is determined by an economic index

D) a predetermined margin is usually between 2.25-3.0%

E) An adjustment interval is the period between potential rate changes

2) In A(n) _____ arrangement, the borrower may end up making payment to cover not only the loan amortization, but also interest on deferred interest from an earlier period.

A)) Graduated payment mortgage

B) shared appreciation mortgage

C) adjustable rate mortgage
D) more than one of the above (which ones)

3) Equity participation:

A) is popular in commercial real estate

B) lets the lender provide borrowed capital
C) lets the lender provide part of the equity or ownership funds
D) more than one of the above

4) Which of the following is a disadvantage of a regular partnership investment arrangement?

A) It is the simplest legal arrangement
B) There is a well-defined center of responsibility
C) The liability of each investor is not limited to his or her investment
D) All of the above are advantages

5) Which of the following is NOT a characteristic of real estate investment trusts?

A) Similar to mutual funds, they pool investor funds and invest directly in real estate or make construction or mortgage loans.

B) They provide a tax shelter to wealthy investors
C) It is the most liquid type of real estate investment
D) All of the above are characteristics of REITS

Answer 1