Sample review questions
RELE 1324 - Sample of Final Review Questions
1. As used in mortgage lending, the term “collateral” means
a. Something of value pledged as security for a loan
b. The purpose for which a mortgage loan is made
c. A valuable asset
d. Associated with but of secondary importance
2. A word that has the legal meaning of a borrower remaining in possession of property pledged as security for a loan is
a. possession
b. collateral
c. security
d. hypothecation
3. The underlying theories that support evaluation of a property are called
a. approaches to value.
b. qualification for designations.
c. principles of appraisal.
d. whatever local practices prevail.
4. Which of the following statements regarding certification of appraisers is correct?
a. It is illegal to undertake an appraisal unless that person is properly certified
b. Appraisers may be certified by each state as long as federal guidelines are adhered to
c. Certified appraisers must be used for every loan whether or not the lender is federally-related
d. All appraisers with peer designations have been grand fathered into state certified status
5. The normal method to reach a final estimate of value in a narrative appraisal is
a. an adjusted average of the approaches to value as determined by the judgment of the appraiser.
b. whatever value is shown by the major approach.
c. a mathematically determined average of all approaches.
d. only the capitalized value as determined by the current market rate of return.
6. The principle of appraising that considers the amount of value that may be added by an improvement is
a. substitution.
b. anticipation.
c. conformity.
d. contribution.
7. The capitalized value of a $24,000 income stream to an investor seeking a 12 percent return is
a. $120,000.
b. $200,000.
c. $240,000.
d. $480,000.
8. The kind of depreciation most closely associated with inadequate building design is
a. design inadequacy.
b. physical deterioration.
c. functional obsolescence.
d. external obsolescence.
9. If the appropriate present worth factor is .90909 and it is applied to an income stream of $35,000, the discounted value would be
a. $18,333.
b. $31,818.
c. $38,500.
d. $66,818.
10. Which of the following types of legal description is most commonly found in urban areas?
a. Geodetic or government survey
b. Metes and bounds
c. General survey
d.
