REVIEW QUESTIONS 1-58 PDF

**Multiple Choice Questions with Correct Answers** 1. The property tax is an \_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_ tax, meaning it is based on value. - A\) Specific Assessment - B\) Sales-Based - **C) Ad Valorem** - D\) Usage\ *Reason*: \"Ad Valorem\" is a Latin...

**Multiple Choice Questions with Correct Answers** 1. The property tax is an \_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_ tax, meaning it is based on value. - A\) Specific Assessment - B\) Sales-Based - **C) Ad Valorem** - D\) Usage\ *Reason*: \"Ad Valorem\" is a Latin term meaning \"according to value,\" which makes it the correct description for property tax based on the value of the property. 2. The assessor is responsible for the \_\_\_\_\_\_\_\_, \_\_\_\_\_\_\_\_, and \_\_\_\_\_\_\_\_ of all taxable property. - A\) Estimation, Recording, Selling - **B) Discovery, Listing, Valuation** - C\) Allocation, Distribution, Taxation - D\) Enforcement, Evaluation, Reporting\ *Reason*: The assessor\'s main tasks are discovering, listing, and valuing all taxable properties in the jurisdiction. 3. The taxable location of personal property is referred to as its \_\_\_\_\_\_\_\_. - A\) Asset - **B) Situs** - C\) Address - D\) Possession\ *Reason*: \"Situs\" is a term that refers to the location where property is subject to taxation. 4. An estimate of value, usually in writing, of an adequately described property, as of a given date, is termed a(n) \_\_\_\_\_\_\_\_. - A\) Assessment - B\) Valuation - **C) Appraisal** - D\) Estimate\ *Reason*: An appraisal is a written estimate of a property\'s value. 5. A jurisdiction\'s tax rate is determined by dividing the \_\_\_\_\_\_\_\_ to be derived from property tax by the total \_\_\_\_\_\_\_\_ of the taxing jurisdiction. - A\) Revenue, Property Count - **B) Budget, Total Assessed Value** - C\) Rate, Taxable Units - D\) Tax Bill, Appraisal Ratio\ *Reason*: The tax rate is found by dividing the total revenue needed by the total assessed value of all properties in the jurisdiction. 6. The type of value usually estimated by the assessor is \_\_\_\_\_\_\_\_ value. - **A) Market** - B\) Cost - C\) Investment - D\) Replacement\ *Reason*: Assessors typically estimate the market value, which is the most probable selling price of a property. 7. The \_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_ reflects the ratio between the current tax bill and the property value. - A\) Tax Rate - B\) Taxable Value - **C) Effective Tax Rate** - D\) Market Adjustment\ *Reason*: The effective tax rate represents the ratio of the annual property tax bill to the market value of the property, which provides insight into the actual tax burden on the property. 8. In order for a property to have value, it must have \_\_\_\_\_\_\_\_, \_\_\_\_\_\_\_\_, \_\_\_\_\_\_\_\_, and \_\_\_\_\_\_\_\_. - A\) Location, Price, Value, Sales Record - **B) Utility, Scarcity, Demand, Transferability** - C\) Accessibility, Appearance, Cost, Ownership - D\) Government Approval, Market Share, Buyer Interest, Title\ *Reason*: These four attributes---utility, scarcity, demand, and transferability---are necessary for a property to have value. 9. The use that generates the highest net return to a property over a reasonable time period is called its \_\_\_\_\_\_\_\_. - A\) Principal Use - B\) Future Value - **C) Highest and Best Use** - D\) Market Allocation\ *Reason*: The highest and best use is the use that provides the greatest economic return to a property. 10. The principle of \_\_\_\_\_\_\_\_ states that maximum value of a neighborhood is attained when the uses of land are perfectly complementary. - A\) Competition - **B) Balance** - C\) Contribution - D\) Anticipation\ *Reason*: The principle of balance suggests that value is maximized when the various uses of land within an area are in harmony and complement each other. 11. Which appraisal principle affirms that land cannot be valued on the basis of one use while improvements are valued on the basis of another? - **A) Principle of Consistent Use** - B\) Principle of Progression - C\) Principle of Substitution - D\) Principle of Change\ *Reason*: The principle of consistent use states that both land and improvements must be valued under the same highest and best use to ensure accuracy in appraisal. 12. Which of the following are the four tests that the appraiser must make in the analysis of the highest and best use? A\) Marketable, Accessible, Sustainable, Valuable B\) Legally assignable, Physically stable, Economically attractive, Historically significant C\) Legally permissible, Physically possible, Financially feasible, Most productive D\) Aesthetically pleasing, Structurally sound, Economically viable, Popular Reason: These four tests ensure that the property is evaluated on criteria that determine the most appropriate and highest possible return use of the land. **3.** \_\_\_\_\_\_\_\_\_\_ is a parcel of land and any structures or improvements that are permanently affixed thereto. - A. Personal Property - **B. Real Estate** - C. Movable Asset - D. Leasehold Estate *Reason:* Real estate is defined as land and any permanent improvements affixed to it, unlike personal property which is movable. **14.** Property is considered \-\-\-\-\-\-\-\-\-- if it can be moved without causing any damage or change to either the item of property or the structure to which it is attached. - A. Real Property - B. Leasehold - C. Tangible Property - **D. Personal Property** *Reason:* Personal property can be moved without causing damage, whereas real property includes land and attachments that are permanent. **15.** Assessment level times the tax rate equals the \-\-\-\-- - A. Property Value - B. Market Price - **C. Effective Tax Rate** - D. Capital Gain Tax *Reason:* The effective tax rate is calculated by multiplying the assessment level by the tax rate. **16.** \_\_\_\_\_\_\_\_ is the point at which the forces of supply and forces of demand meet. - A. Inflation - **B. Equilibrium** - C. Deflation - D. Price Ceiling *Reason:* Equilibrium is the economic term for the point where supply equals demand, leading to market stability. Sure! Here's the revised multiple-choice test with the correct answer bolded and the reason for **17. Highest and Best Use analysis can be conducted under which two scenarios?**\ A. **As if vacant, As if improved**\ B. As if developed, As if urbanized\ C. As if purchased, As if sold\ D. As if leased, As if financed **Reason**: Highest and Best Use analysis can be conducted by assuming the property is vacant (to evaluate its potential use) or considering it as currently improved with structures. 18**. The typical life cycle of a neighborhood includes:** A. Growth, Expansion, Decline, Renewal\ B. **Growth, Stability, Decline, Revitalization**\ C. Formation, Growth, Decline, Reformation\ D. Prosperity, Decline, Stagnation, Revitalization **Reason**: The typical phases in a neighborhood\'s life cycle are growth, stability, decline, and then revitalization, reflecting how communities develop and change over time. **19. What elements of the marketplace are most likely to contribute to a change in demand?**\ A. Government regulations, Transportation costs, Consumer income\ B. **Consumer tastes and preferences, Consumer income, Price of related commodities, Consumer expectations, Price of the commodity**\ C. Labor availability, Market interest rates, Land supply\ D. Cost of production, Interest rates, International competition **Reason**: Changes in consumer tastes, preferences, income, expectations, and the prices of related or target commodities are key factors affecting market demand. **20. Market value is defined as the most probable price of a property in terms of money, assuming:**\ A. Buyer and seller are typically motivated.\ B. A reasonable time is allowed for exposure in the open market.\ C. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto.\ D. **All of the above** **Reason**: Market value is based on conditions where the buyer and seller are typically motivated, the property is exposed in the open market for a reasonable time, and payment is made in cash or equivalent terms. **21. \_\_\_\_\_\_\_\_\_\_ refers to the amount of goods that producers are willing to sell at a given price during a specified time period.**\ A. Demand\ B. **Supply**\ C. Market equilibrium\ D. Inventory **Reason**: Supply refers to the quantity of goods that producers are willing and able to sell at a given price during a specific time period. **22. Ownership of all legal rights to property is limited by government in four ways:**\ A. **Taxation, Police power, Eminent domain, Escheat**\ B. Taxation, Regulation, Zoning, Permit\ C. Licensing, Zoning, Eminent domain, Registration\ D. Taxes, Planning authority, Market regulation, Public safety\ **Reason**: Government limits ownership of property through four primary means: taxation, police power (regulation), eminent domain (taking property for public use), and escheat (property reverts to the state if there is no heir). **23. The seven steps of the appraisal process are as follows:**\ A. Scope of work, Market analysis, Estimation, Valuation, Verification, Reporting, Approval\ B. Preliminary survey, Highest and best use, Data analysis, Market analysis, Final report, Estimation, Reconciliation\ C. **Definition of the problem, Scope of work, Preliminary survey and planning, Data collection and analysis, Highest and best use, Application of the data and the three approaches, Correlation/reconciliation to final estimate**\ D. Definition of the problem, Market study, Collection of data, Valuation, Estimation, Verification, Correlation\ **Reason**: The appraisal process starts by defining the problem, determining the scope of work, conducting a preliminary survey and planning, collecting and analyzing data, identifying the highest and best use, applying the three valuation approaches, and finally correlating/reconciling the results to reach the final estimate. **24. The basis for the adjustments in the sales comparison approach to value is the principle of:**\ A. Substitution\ B. **Contribution**\ C. Anticipation\ D. Balance\ **Reason**: In the sales comparison approach, the adjustments are based on the principle of contribution, which states that the value of a component is measured by how it contributes to the overall property value. **25. \_\_\_\_\_\_\_\_ represents the value of a property for a specific use.**\ A. Investment value\ B. **Value in use**\ C. Market value\ D. Assessed value\ **Reason**: Value in use represents the value of a property for a specific use, which may differ from its market value because it considers the property\'s usefulness to a particular owner. Here are questions 27 to 31 formatted as multiple-choice: **27. The principle of \_\_\_\_\_\_\_\_\_\_\_\_\_ states that value is created by the expected future benefits to be derived from the property.**\ A. Contribution\ B. Substitution\ C. **Anticipation**\ D. Balance\ **Reason**: The principle of anticipation states that value is created based on the future benefits that ownership of the property will provide. **28. The six basic rights associated with property are as follows:**\ A. Buy, Sell, Borrow, Rent, Invest, Divest\ B. Occupy, Lease, Transfer, Change, Retain, Convert\ C. **Sell, Lease, Use, Giveaway, Enter or leave, Refuse to do any of the above**\ D. Own, Mortgage, Develop, Rent, Insure, Sell\ **Reason**: The six basic rights include selling, leasing, using, giving away, entering or leaving the property, and refusing to do any of the above, representing complete control over the property. **29. The ownership of all legal rights to property is known as \_\_\_\_\_\_\_\_\_\_\_.**\ A. Leasehold estate\ B. Limited ownership\ C. **Fee simple ownership**\ D. Shared equity\ **Reason**: Fee simple ownership represents the complete ownership of all legal rights to a property, often referred to as \"absolute ownership.\" **30. Determining the identity of the property to be appraised is a part of the \_\_\_\_\_\_\_ step in the appraisal process.\ A. Last\ B. First\ C. Logical\ D. Full\ Reason: Determining the identity of the property is part of the first step in the appraisal process, which is crucial for accurately appraising the correct property.** **31. The three types of boundaries used to delineate neighborhoods are \_\_\_\_\_\_\_\_\_\_, \_\_\_\_\_\_\_\_\_\_, and \_\_\_\_\_\_\_\_\_\_.**\ A. Political, Market, Economic\ B. Geographic, Functional, Social\ C. **Physical, Economic, Social**\ D. Functional, Commercial, Residential\ **Reason**: The three types of boundaries are physical (natural or man-made), economic (factors related to property values), and social (demographic and cultural characteristics). **32. Under the step in the appraisal process that is termed data collection and analysis, specific data include:**\ A. **Physical data, Sales data, Site data, Economic data**\ B. Demographic data, Weather data, Market interest rates, Political data\ C. Geographic data, Legal data, Financial data, Urban data\ D. Environmental data, Cultural data, Financial data, Social data\ **Reason**: Specific data in the data collection and analysis step include physical, sales, site, and economic data related to the subject property and comparable properties. **33. The four forces that influence value and must be considered in neighborhood analysis are as follows:**\ A. **Physical (environmental), Economic, Governmental, Social**\ B. Social, Cultural, Political, Financial\ C. Historical, Legal, Demographic, Institutional\ D. Technological, Financial, Regulatory, Community\ **Reason**: Neighborhood value is influenced by physical, economic, governmental, and social forces, which must be analyzed to understand the overall neighborhood dynamics. **34. The typical life cycle of a neighborhood can be extended or shortened by changes in \_\_\_\_\_\_\_ factors.**\ A. Demographic\ B. Physical\ C. **Economic**\ D. Social\ **Reason**: Economic factors, such as job growth or economic decline, can significantly extend or shorten the life cycle of a neighborhood by affecting its overall stability. **35. An area of complementary land uses in which all properties are similarly influenced by the four forces affecting value is termed a \_\_\_\_\_\_\_\_\_\_\_\_.**\ A. **Neighborhood**\ B. District\ C. Zone\ D. Subdivision\ **Reason**: A neighborhood is an area where properties are similarly affected by the four forces of value (physical, economic, governmental, and social), creating complementary land uses. **36. Municipal services, planning, and zoning are examples of \_\_\_\_\_\_\_\_\_\_ factors that affect neighborhoods.**\ A. Physical\ B. Social\ C. Economic\ D. **Governmental**\ **Reason**: Municipal services, planning, and zoning are examples of governmental factors that affect neighborhood dynamics and property values. **37. What are the four basic elements of supply?**\ A. Availability, Production costs, Consumer demand, Financing\ B. **Cost of production, Price of other goods, Entrepreneur expectations, Number of sellers**\ C. Manufacturing cost, Sales data, Market trends, Profit margins\ D. Utility, Demand, Production, Market price\ **Reason**: The four basic elements of supply are the cost of production, price of other goods, entrepreneur expectations, and the number of sellers. **38. The underlying principle for the three approaches to appraisal is \_\_\_\_\_\_\_\_\_\_.**\ A. Anticipation\ B. Contribution\ C. **Substitution**\ D. Balance\ **Reason**: The principle of substitution is the underlying concept for the three approaches to appraisal (sales comparison, cost, and income approaches), stating that a property\'s value is influenced by the cost of acquiring an equivalent substitute property.