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CERTIFIED RESIDENTIAL: Statistics, Modeling, and Finance
Final Exam Answer Key
Reference: Chapter 1
1. The mathematical process concerned with collecting, organizing, and examining data is
a. analysis.
b. assessment.
c. interpolation.
d. statistics.
Reference: Chapter 1
2. Which statement contains an analytical statistic?
a. A die (one of a pair of dice) has six sides.
b. A die rolled 50 times came up “6” ten times.
c. The die weighs 0.693 ounces.
d. The probability of any one side landing face up is 16.67%.
Reference: Chapter 1
3. Which of these terms is NOT related?
a. data
b. odds
c. population
d. sample
Reference: Chapter 1
4. In final data analysis, an appraiser should give the greatest weight to
a. accuracy.
b. algorithm.
c. judgment.
d. standard deviation.
Reference: Chapter 1
5. A high confidence interval will usually
a. be used only with data sets less than 100.
b. be used only with data sets greater than 100.
c. create a credible result.
d. create a noncredible result.
Reference: Chapter 2
6. Which is synonymous with “average?”
a. mean
b. median
c. mode
d. standard deviation
Reference: Chapter 2 Pages
7. Which calculation assigns datum points a percentage of the total to compensate for data
that may not be truly representative of the sample or population?
a. adjusted average
b. biased mean
c. skewed average
d. weighted mean
Questions 8–11 refer to following data:
Seven gross rent multipliers have been calculated for a subdivision. They are:
80, 82, 84, 82, 79, 85, and 82.
Reference: Chapter 2
8. What is the mean gross rent multiplier?
a. 80
b. 81
c. 82
d. 83
Reference: Chapter 2
9. What is the median gross rent multiplier?
a. 80
b. 81
c. 82
d. 83
Reference: Chapter 3
10. What is the range for the multipliers calculated?
a. 4
b. 5
c. 6
d. 7
Reference: Chapter 2
11. What is/are the mode(s) of the gross rent multipliers data set?
a. 7
b. 79 and 85
c. 82
d. no mode
Reference: Chapter 3
12. What term describes the collection of every possible data point?
a. census
b. complete sample
c. population
d. universe
Reference: Chapter 3
13. When gathering data for statistical analysis, which economic principle is most important?
a. anticipation
b. change
c. conformity
d. substitution
Reference: Chapter 3
14. The average distance of a datum point from the center of the data set is represented by
a. a fractile.
b. parameter.
c. standard deviation.
d. the median’s mean.
Reference: Chapter 3
15. The median is an example of
a. fractiles.
b. matched pair analysis.
c. regression analysis.
d. statistical probability.
Reference: Chapter 4
16. Collecting and analyzing data to forecast what is likely to happen in the future based on
what has happened in the past is
a. estimating.
b. extrapolation.
c. forecasting.
d. statistical inference.
Reference: Chapter 4
17. As the size of the data set _________________, the reliability of the analysis _________.
a. decreases, decreases.
b. decreases, increases.
c. increases, decreases.
d. increases, remains unchanged.
Reference: Chapter 4
18. With a data set containing more than 200 observations, the appraiser gives the greatest
weight to the
a. amount of data.
b. mode.
c. nearness of the data to the mean.
d. range.
Reference: Chapter 4
19. A proper statistical analysis is based on what type of data?
a. forecasted
b. historical
c. sale price
d. universal
Reference: Chapter 4
20. Properties a lender takes back through foreclosure and now owns are
a. lender foreclosed.
b. lender owned.
c. real estate owned.
d. real property assets.
Reference: Chapter 5
21. What mathematical process is the basis for most AVMs and AAVMs?
a. normal distribution of data
b. progression analysis
c. regression analysis
d. standard deviation
Reference: Chapter 5
22. The term ad valorem is used most often in reference to calculating the
a. GLA.
b. gross rent multiplier.
c. real property taxes.
d. reconciliation process.
Reference: Chapter 5
23. Another name for beta coefficient is
a. alpha factor.
b. coaxial.
c. slope of the regression line.
d. trend line angle.
Reference: Chapter 5
24. The relationship among three or more variables is examined using which type of
analysis?
a. multiple progression
b. multiple regression
c. polynomial regression
d. simple progression
Reference: Chapter 5
25. Which analytical model is generally the most accurate?
a. AAVM
b. AVM
c. BPO
d. CMA
Reference: Chapter 7
26. The calendar date on which property value is established is the
a. applied date.
b. effective date.
c. inspection date.
d. report date.
Reference: Chapter 7
27. The variable with the greatest impact on real property affordability is
a. compounding term.
b. interest rate.
c. macroeconomics.
d. microeconomics.
Reference: Chapter 7
28. A purchase money mortgage is most often associated with
a. convention loans.
b. FHA and VA loans.
c. nonconforming loans.
d. seller financing.
Reference: Chapter 7
29. Most real estate transactions use two forms of capital. What are the two primary sources?
a. banks and saving and loans
b. debt and equity
c. lenders and insurance companies
d. mortgage bankers and mortgage bankers
Reference: Chapter 7
30. Mortgage interest rates are established by
a. EE government-issued saving bonds.
b. lenders in the marketplace.
c. supply and demand.
d. the Federal Reserve Bank.
Reference: Chapter 7
31. What is the major difference between a mortgage banker and a mortgage broker?
a. Mortgage bankers can make loans in excess of $250,000 and brokers cannot.
b. Mortgage bankers have their own source of funds and brokers do not.
c. Nothing, they are the same.
d. The mortgage banker is state regulated and the broker is not.
Reference: Chapter 7
32. When the reported sale price for a comparable includes a boat and trailer valued at
$5,000, what adjustment is made to the subject?
a. -$5,000
b. -$2,500
c. $0
d. +$5,000
Reference: Chapter 7
33. What is the relationship between the APR and the loan amount, relative to a fixed
monthly payment?
a. As the APR decreases the loan amount decreases.
b. As the APR decreases the loan amount increases.
c. As the APR increases or decreases the loan amount remains unchanged.
d. As the APR increases the loan amount increases.
Reference: Chapter 8
34. What term describes a lender who does NOT sell loans to the secondary market?
a. conventional
b. end
c. non-conforming
d. portfolio
Reference: Chapter 8
35. Ten- and thirty-year Treasuries are the basis for which interest rate?
a. EE savings bond rate
b. Federal Reserve rate to member banks
c. long-term mortgage rate
d. prime rate
Reference: Chapter 8
36. The Federal Reserve Board is likely to raise interest rates when the
a. economy is growing too quickly.
b. economy is not growing fast enough.
c. federal income tax rates are not producing enough revenue.
d. new housing starts are down.
Reference: Chapter 8
37. Ginnie Mae was created in 1968 as a replacement for
a. Fannie Mae.
b. Freddie Mac.
c. Sallie Mae.
d. the FHA Guarantee Loan Program.
Reference: Chapter 9
38. A non-conforming loan does NOT conform to the underwriting guidelines of the
a. FHA and VA.
b. Mortgage Bankers Association.
c. Office of Thrift Management.
d. secondary market.
Reference: Chapter 9
39. Which is NOT a conventional loan?
a. 30-year fixed rate
b. 20-year fixed rate with balloon
c. 15-year adjustable rate
d. FHA
Reference: Chapter 9
40. A larger-than-normal payment at the end of the term that pays off a loan’s remaining
balance is the
a. adjusted final.
b. balloon.
c. ending balance.
d. termination.
Reference: Chapter 9
41. A house sold for $180,000, with a 75% loan-to-value mortgage. The lender charged 3
points in closing costs. What is the amount of closing costs paid?
a. $1,800
b. $3,650
c. $4,050
d. $4,800
Reference: Chapter 10
42. Converting future cash flows into present value is
a. annuity analysis.
b. discounting.
c. future value.
d. negative compounding.
Reference: Chapter 10
43. Which concept is the basis for the statement, “A dollar today is generally worth more
than a dollar received in the future?”
a. compound theory of money
b. discount theory of money
c. equalization theory
d. time value of money
Reference: Chapter 10
44. Using either interest tables or a financial calculator, calculate the monthly payment on an
$80,000 loan for 15 years at 6% interest.
a. $445
b. $507
c. $675
d. $762
Reference: Chapter 10
45. What is one of the major disadvantages to financial tables?
a. Information is cursory.
b. Tables are limited to specified rates and loan terms.
c. They are more difficult to use than calculators.
d. You can use them anywhere.
Reference: Chapter 10
46. A condo association will need a new parking lot in 20 years. Which function would you
use to calculate the amount of money to set aside each month to pay for the new lot when
it is needed?
a. amortization
b. future value of a $1 per period
c. present value of a $1 per period
d. sinking fund factor
Reference: Chapter 11
47. When funds are borrowed at an interest rate greater than the investment rate, what
occurs?
a. greater cash flows
b. inverse cap rate
c. negative leverage
d. positive leverage
Reference: Chapter 11
48. What is the balance on a $120,000 loan, at 8% interest for 30 years, after seven years of
monthly payments?
a. $ 97,651.01
b. $105,895.45
c. $110,972.92
d. $115,234.02
Reference: Chapter 11
49. Generally, what effect does low-interest creative financing have on the market price of a
comparable?
a. decrease
b. decrease inversely to the lower rate
c. increase
d. no affect
Reference: Chapter 11
50. What remains when debt service is subtracted from NOI?
a. cash flow
b. net income
c. principal
d. reserves