Question

13. The typical method of distributing proceeds available from a construction loan is a:

(A) Single lump sum of money at the closing of the loan

(B) Single lump sum of money at the end of the construction project to reimburse the developer for the project’s expenses and profit

(C) Series of payments throughout the construction project to loan the developer for costs incurred since the previous payment

(D) Series of payments throughout the construction project to reimburse the developer for anticipated expenses in the upcoming period

14.Which of the following is NOT one of the typical categories of the real estate investment risk/reward spectrum?

(A) Core / Core +

(B) Value-added

(C) Growth

(D) Opportunistic

15. Which of the following statements is FALSE regarding the release price as it relates to a land development of a new housing community and the associated sales of lots (parcels)?

(A) It is usually calculated to pay off the loan when the last lot is sold

(B) It is usually calculated to pay off the loan before the last lot is sold

(C) Increasing the release price usually lowers the lender’s risk

(D) Increasing the release price is likely to lower the developer’s cash flow in the early years

17.Bob buys a property with an 80% LTV, interest only, mortgage at an annual interest rate of 6.5%, with monthly payments. Bob’s IRR is 10%. Which of the following is true about Bob’s return on equity (ROE)?

(A) The leveraged return is the same as it would have been if he didn’t use leverage

(B) There is not enough information to answer this question

(C) The leveraged return is higher than the unleveraged return

(D) The unleveraged return is higher than the leveraged return

Answer 1

13. The typical method of distributing proceeds available from construction loan is by series of payments throughout the construction project to reimburse developer for cost since previous payments. Hence correct statement is option(C)

Rest of statement are false as it cannot be reimbursed through single lump sum at the closing of loan or at the closing of construction project. It cannot be reimbursed for upcoming period.

Hence the correct answer is option ( C).