16.

A comparable property has a feature that is superior to the subject property being appraised. What adjustment should be made in the sales comparison approach to value?

Select one:

a. Value of the feature should be subtracted from the value of the subject property.

b. Value of the feature should be subtracted from the sales price of the comparable property.

c. Insufficient information.

d. Value of the feature should be added to the value of the subject property.

e. Value of the feature should be added to the sales price of the comparable property.

17.

Peter has just made a $5 million offer to a home seller by making a 10% initial deposit. He must arrange a mortgage loan with a local bank within one month to close the transaction. Currently, banks are willing to finance only 70% of the appraised property value. If the property price falls by 0.571 million, the minimum savings that Peter must have in order to complete the transaction successfully is nearest:

Select one:

a. $1.3 million

b. $1.1 million

c. $1.0 million

d. $1.4 million

e. $1.2 million

18.

Which of the following statements regarding mortgage-backed securities is/are correct?

I. Mortgage-backed bond investors assume higher interest rate risk than mortgage pass-through investors

II. Mortgage-backed bond investors assume lower prepayment risk than mortgage pass-through investors

III. As the market interest rate keeps increasing, the market value of a mortgage pass-through will eventually exceed that of a mortgage-backed bond with the same time to maturity and coupon rate.

Select one:

a. III only

b. I only

c. I and II only

d. I, II, and III

e. II only

19.

Which of the following is NOT a principal market risk of a fixed-rate MBS mortgage pool consisting of mortgages for office and industrial buildings?

Select one:

a. rising interest rates

b. increasing default rate on personal bank loans

c. declining commercial real estate prices

d. weak space markets

e. higher than expected inflation rate

20.

Laura has obtained a special 3-year, $10,000 decreasing graduated payment mortgage from Nopay Bank. The three annual payments will decrease by 20% each year. If the interest rate for the mortgage is 10%, the balance of the mortgage after two payments is nearest:

Select one:

a. $3,136

b. $2,936

c. $2,836

d. $3,236

e. $3,036