FIN 5400 Mid-Term Study Guide PDF

**FIN 5400** **Study Guide** **For 1 hour examination at 2:30 pm on October 21** Timed exam in Room 337 The exam will be on paper that will be submitted after 1 hour. Closed book and no notes. After 1 hour there will be a 15-minute break, and then class will resume until 5 pm. It will be prim...

**FIN 5400** **Study Guide** **For 1 hour examination at 2:30 pm on October 21** Timed exam in Room 337 The exam will be on paper that will be submitted after 1 hour. Closed book and no notes. After 1 hour there will be a 15-minute break, and then class will resume until 5 pm. It will be primarily multiple choice with some calculations. The primary goal of this exam is to assure that going forward we understand - The terms to describe real estate, and - The basic methods to analyze real estate. Know these calculations in Excel. - PMT - NPV - PV - FV For this exam you will not be asked to calculate Yield or IRR. **All Exam Questions will be taken from the following Assignments, distributed documents and PowerPoint Slides. They are your Best Study Guides** - The PowerPoint Slides, especially the key terms used - The 46 questions with answer key distributed as the Class 3 Written Assignment; some of these questions will be on the exam. - "Standard Measurements of Real Estate" distributed in the Week 2 Module, except the legal description of 1940 Gratiot. - "Skills Applicable to Real Estate that Business Major Should Have" distributed in the Week 2 Module, except you will not be asked to calculate Yield and IRR, but understand what they mean. - These textbook reading assignments. - Chapter 1 - Chapter 4 in part: "Determinants of Mortgage Interest Rates: A Brief Overview," and "Understanding Fixed Interest Rate Mortgage Terms" - Chapter 7 in part: "Factors that Influence Housing as an Investment" - Chapter 10 in part: pages 292 through 302 in the Ebook - Chapter 12 in part: "Underwriting Loans on Income Properties" **Know how to use the following terms to describe and analyze real estate**, all of which are described in **Your Best Study Guides** above. Market Value Investment Value Efficient Market Inefficient Market Number of square feet in an acre Number of acres in a square mile Spread between 30-year mortgage rate and 10-year treasury yield. GSF NSF RSF Components of residential property: site, site improvements, building improvements, fixtures Measuring a single-unit property: GSF, basement, porch, garage, walkout, daylight Residential Mortgages: Retail (Rocket), Wholesale (UWM), Correspondent Measuring Industrial Property: GSF Measuring Retail property: GSF or RSF Measuring Office Property: GSF or RSF Efficiency of buildings: RSF÷GSF Physical depreciation, curable Physical depreciation, incurable Functional Obsolescence, curable Functional Obsolescence, incurable External Obsolescence GPI Vacancy Loss Collection Loss EGI Operating Expenses Allowance for Replacement Reserves NOI Direct Capitalization/OAR/Going-In Capitalization Rate Terminal/Reversion Capitalization Rate EBITDA Positive Leverage Gross Lease Net Lease Appraisal's 3 approaches to value, typically market value - Sales Comparison - Income - Cost Highest and Best Use: - Legal permissible - Physically possible - Financially feasible - Maximally productive Investment Grade Properties Non-Investment Grade Properties Local Properties Setbacks Floor Area Ratio (FAR) Land to Building (LTB) ratio