BUQS 3020 Test
BUQS 3020 Test
BUQS 3020 Test
SECTION A: Please select by marking the appropriate answer or answers in each question
The following are the main areas of real estate EXCEPT 0.5 mark
a. Property management
b. Building design
c. Valuation
d. Brokerage
e. Finance
Which of the following statements are TRUE about location and residual land value? 1
marks
a. Land derives its value from only factors of production
b. Residual land value is the remaining value of land after some items are taken out of
the land
c. Values are normally recorded in municipal bills/rolls
d. Competition does not necessarily improve services or products; it normally leads
to price “wars
The two ways of achieving real estate principles are through 1 mark
a. Generating income flow
b. Generating investments
c. Generating capital return
d. Generating expenses
e. Generating value
Which of the following concepts IS NOT associated with market analysis? 0.5 mark
a) Vacancy
b) Market rent
c) New construction
d) Absorption
e) Cash flow
What is not a lease contract? 0.5 mark
a) Contract between the holder of property rights and consumer/user of at least some of
those rights, covering a specified period of time
b) Sale of the use of space for a predetermined period
c) Leases usually give possession and usage rights but not redevelopment rights
d) lease specifies other rights and responsibilities of landlord and tenant for ground
lease
Which of the following does not classify feasibility problems in real estate? 0.5 mark
a) A use or user looking for a site
b) A site in search of a use
c) An investor in search of an opportunity
d) A site in search of a developer
1. What is the term used to describe the difference between the market value of a
property and the cost to build it? a. Depreciation
b. Amortization
c. Capital Gain
d. Capital Expenditure
2. What does the term "capitalization rate" represent in property valuation? a. The
interest rate of a mortgage
b. The rate at which the property appreciates
c. The rate at which income generated is converted to property value
d. The rate of tax levied on the property
3. What is often the best method for valuing a unique property with no comparable sales
data? a. Residual land value approach
b. Comparable sales method
c. Depreciated replacement cost method
d. Income capitalization method
4. According to the Municipal Property Rates Act, what is exempt from being rated? a.
Commercial buildings
b. Municipal properties
c. Vacant land
d. Residential buildings
5. When is a property's Net Operating Income (NOI) the lowest? a. When the
capitalization rate is high
b. When the capitalization rate is low
c. When the operating expenses are high
d. When the gross operating income is low
ANSWERS
Multiple-Choice Questions
1. What is the term used to describe the difference between the market value of a
property and the cost to build it?
Answer: c. Capital Gain
2. What does the term "capitalization rate" represent in property valuation?
Answer: c. The rate at which income generated is converted to property value
3. What is often the best method for valuing a unique property with no comparable sales
data?
Answer: c. Depreciated replacement cost method
4. According to the Municipal Property Rates Act, what is exempt from being rated?
Answer: b. Municipal properties
5. When is a property's Net Operating Income (NOI) the lowest?
Answer: c. When the operating expenses are high
SECTION B.
What is bubble, burst and boom market in the property market? Summarily discuss
three marks.