How Well Do You Know The Language Of Property Investment?

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| By Planinsek

Planinsek

Community Contributor

Quizzes Created: 1 | Total Attempts: 139

Questions: 15 | Attempts: 139 | Updated: Mar 20, 2023

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How well do you know the language of property investment? It is hard to navigate with out help if you don't speak the language!

Questions and Answers

1.

The repayment of financial obligation over a period of time in a series of periodic instalments, eg. the payback owed to the lender
- A.
  
  Amoritization
- B.
  
  Proration
- C.
  
  Debit
- D.
  
  Credit
Correct Answer
A. Amoritization

Explanation
When used in the context of a home purchase, amortization is the process by which loan principal decreases over the life of a loan, typically an amortizing loan. With each mortgage payment that is made, a portion of the payment is applied towards reducing the principal, and another portion of the payment is applied towards paying the interest on the loan.

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2.

In general, when the supply of a certain commodity increases,
- A.
  
  Price tends to rise
- B.
  
  Price tends to drop
- C.
  
  Demand for it tends drop
- D.
  
  Demand for it tends rise
Correct Answer
B. Price tends to drop

Explanation
If demand is constant and supply increases, sellers complete with each other by lowering prices.

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3.

Legal documents through which a loan is obtained to purchase real estate is called a mortgage?
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
A mortgage is a legal document that is used to obtain a loan for the purpose of purchasing real estate. It serves as a security for the lender, as it gives them the right to take possession of the property if the borrower fails to repay the loan. Therefore, the statement "Legal documents through which a loan is obtained to purchase real estate is called a mortgage" is true.

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4.

The mortgage represents a portion of the total value of the real estate. This is expressed by the financial phrase "loan to value ratio" (the relationship between loan and value of property)
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
The explanation for the given correct answer is that a mortgage does represent a portion of the total value of the real estate. The loan to value ratio is a financial phrase that expresses the relationship between the loan amount and the value of the property. Therefore, it is true that the mortgage represents a portion of the total value of the real estate.

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5.

Something of value that is given to show acceptance or acknowledgement of a contract, such as money or a promise
- A.
  
  Consideration
- B.
  
  Assessed Value
- C.
  
  Accepted Notice
- D.
  
  Appraised Value
Correct Answer
A. Consideration

Explanation
Consideration refers to something of value that is given by one party to another as a part of a contract. It can be in the form of money, goods, services, or even a promise to do or not to do something. It is an essential element of a contract and signifies the acceptance and acknowledgement of the agreement between the parties involved. In this context, consideration is the most appropriate answer as it aligns with the definition provided.

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6.

Principal characteristics of fee simple title include all of the following except:
- A.
  
  It is transferable
- B.
  
  It is a free emcumbrances
- C.
  
  It is of indefinite duration
- D.
  
  It may be willed
Correct Answer
B. It is a free emcumbrances

Explanation
Fee simple title is not necessarily free of loans or other emcumbrances

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7.

Counteroffer is:
- A.
  
  A rejection of an offer to buy or sell, with a simultaneous substitute offer.
- B.
  
  A change of mind of an offer to buy or sell taking everything "off the table".
- C.
  
  An acceptance of an offer to buy or sell, with a simultaneous substitute offer.
- D.
  
  None of the above
Correct Answer
A. A rejection of an offer to buy or sell, with a simultaneous substitute offer.

Explanation
A counteroffer refers to the act of rejecting an initial offer to buy or sell something, while simultaneously proposing a substitute offer. It indicates a change in the terms or conditions of the original offer, typically in response to dissatisfaction or a desire for different terms. This allows the parties involved to negotiate and potentially reach a mutually agreeable agreement.

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8.

Charging an excessively high rate of interest is known as gouging the buyer.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
This practice is called usury, there is no usury limit on most mortgage loans. Investors need to be mindful to compare mortgage interest rates between lenders.

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9.

A mortgage is provided by lenders who charge interest for the use of the borrowed money to make a profit. This amount is known as the principal.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
A mortgage is a loan provided by lenders to borrowers, typically for the purpose of purchasing a property. Lenders charge interest on the borrowed money as a way to make a profit. The interest is calculated based on the principal amount, which is the initial sum borrowed. Therefore, the statement that a mortgage is provided by lenders who charge interest and the amount is known as the principal is true.

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10.

The mortgage application fee is a fee that is paid by the seller and is usually paid at settlement. The is refundable if a mortgage cannot be obtained.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
The mortgage application fee is paid by the borrower at the time of mortgage application is usually non refundable.

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11.

A method of transferring the rights and obligations of a contract to a third party without canceling the contract
- A.
  
  Deed
- B.
  
  Assignment
- C.
  
  Deed of release
- D.
  
  Direct deeding
Correct Answer
B. Assignment

Explanation
Assignment is the correct answer because it refers to the act of transferring the rights and obligations of a contract to a third party without canceling the contract. This is commonly done when one party wants to transfer their contractual obligations to another party, allowing the new party to step into the original party's shoes and fulfill their obligations.

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12.

When a part of a building, or an obstruction physically intrudes, overlaps, or trespasses the property of another, this is referred to as an:
- A.
  
  Assesmblage
- B.
  
  Escheat
- C.
  
  Easement
- D.
  
  Encroachment
Correct Answer
A. Assesmblage
13.

A liability or equity entered in a party's favour:
- A.
  
  Credit
- B.
  
  Cost
- C.
  
  Annuity
- D.
  
  Debit
Correct Answer
A. Credit

Explanation
In accounting, when a liability or equity is entered in a party's favor, it is recorded as a credit. This means that the party is receiving a benefit or an increase in their financial position. Credits are used to record increases in liabilities, equity, and revenue accounts, while debits are used to record decreases in these accounts. Therefore, in this context, the correct answer is credit.

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14.

An increase in the value or worth of something due to economic or related causes such as supply and demand, which may prove to be either permanent or temporary.
- A.
  
  Appropriation
- B.
  
  Depreciation
- C.
  
  Appreciation
- D.
  
  Amortization
Correct Answer
C. Appreciation

Explanation
Appreciation refers to the increase in value or worth of something, which can be attributed to economic factors like supply and demand. This increase can either be permanent or temporary.

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15.

Deduction is:
- A.
  
  An amount due or owed
- B.
  
  A liability or equity entered in a party's favour.
- C.
  
  An amount of money added to income when calculating federal income tax.
- D.
  
  An amount of money subtracted from income when calculating federal income tax.
Correct Answer
D. An amount of money subtracted from income when calculating federal income tax.

Explanation
Deduction refers to the amount of money that is subtracted from an individual's income when calculating their federal income tax. This deduction helps to reduce the taxable income, resulting in a lower tax liability. Therefore, the correct answer is "An amount of money subtracted from income when calculating federal income tax."

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Current Version
Mar 20, 2023

Quiz Edited by
ProProfs Editorial Team
Mar 20, 2014

Quiz Created by
Planinsek

How Well Do You Know The Language Of Property Investment?

The repayment of financial obligation over a period of time in a series of periodic instalments, eg. the payback owed to the lender

In general, when the supply of a certain commodity increases,

Legal documents through which a loan is obtained to purchase real estate is called a mortgage?

The mortgage represents a portion of the total value of the real estate. This is expressed by the financial phrase "loan to value ratio" (the relationship between loan and value of property)

Something of value that is given to show acceptance or acknowledgement of a contract, such as money or a promise

Principal characteristics of fee simple title include all of the following except:

Counteroffer is:

Charging an excessively high rate of interest is known as gouging the buyer.

A mortgage is provided by lenders who charge interest for the use of the borrowed money to make a profit. This amount is known as the principal.

The mortgage application fee is a fee that is paid by the seller and is usually paid at settlement. The is refundable if a mortgage cannot be obtained.

A method of transferring the rights and obligations of a contract to a third party without canceling the contract

When a part of a building, or an obstruction physically intrudes, overlaps, or trespasses the property of another, this is referred to as an:

A liability or equity entered in a party's favour:

An increase in the value or worth of something due to economic or related causes such as supply and demand, which may prove to be either permanent or temporary.

Deduction is: