Professional Documents
Culture Documents
Wang Res9776
Wang Res9776
Course Materials:
(C):
(O):
(N):
(F):
"Real Estate Finance: Theory and Practice", 6th edition, by Terrence Clauretie and G. Stacy
Sirmans, 2010.
This book surveys the basic issues in real estate finance and investment, as such, it
serves as a very good reference material for this class. My lectures will not follow the
book very closely and I will rely heavily on my handouts (approximately 50% and
50%). Consequently, examination questions will not come directly from the
textbook. However, I still suggest that students purchase the textbook because it
provides very good back ground information for class discussions.
"Real Estate Investment Trust: Structure, Performance, and Investment Opportunities",
Oxford University Press (New York), 2003, by Su Han Chan, John Erickson, and Ko Wang.
This book provides a systematic and comprehensive look at the REIT Industry, as
such, it serves as a good reference book for students who are interested in pursuing
more on this topic. This is a reference text and is not a required book for this
class.
A package of lecture notes that can be downloaded from my website. This package
contains a rough draft of my lecture notes. I will follow the notes very closely in my
lectures. It is necessary to obtain a password to obtain the files. The web site address is
http://faculty.baruch.cuny.edu/kwang/classes/courses.htm. When you try to download the
files, you will first see a login window. After you see the login window, type the
following:
Enter Password: ********
I will announce the password in the class.
There are a total of 10 sets of lecture notes for this class. They are:
N1: Introduction. PDF
N1: Mortgage Concept. PDF
N2: Development of Mortgage Market. PDF
N3: Alternative Mortgages. PDF
N4: Creative Financing. PDF
N5: Secondary Mortgage Market. PDF
N6: Underwriting and Foreclosure. PDF
N7: Development and Construction Loans. PDF
N8: Capital Decisions. PDF
N9: Real Estate Return and Risk. PDF
N10: REIT Performance. PDF
A package of Excel files:
This package contains the spreadsheet programs I used to derive some of the tables in
my lecture note for this class. Those files are extremely helpful when a student wants
to know the formula behind each calculation. I believe that a detailed study of the files
will help students understand the course materials. Students can also download the
Excel files from my website by following the same procedure described in section
(N).
F1: Time Value of Money. Excel Document
F2: Sinking Fund & Mortgage Constant. Excel Document
2.
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5.
Unless otherwise told, you are NOT responsible for ALL the material in a chapter. Pay
attention to my class lectures and use the textbook as a reference. The overhead
transparencies and class handouts contain the important points in this class. For the
exams, use them as a guide to where your studying should be focused.
I will not take class attendance. However, if you miss classes, it will be
EXTREMELY difficult for you to pass the exams. If you miss a lecture, it will take
you a lot of time to catch up.
NO MAKE-UP EXAM will be given. Should you miss an exam without presenting to
me a legitimate reason prior to the exam, you will be assigned a score of zero for the
exam.
Please pay attention to the university's policy on academic dishonesty.
I will allow a student to drop this class as long as the procedure conforms to the university
withdrawal policy.
In-class component:
1.
A borrower can obtain a lower first year interest rate (as compared to the first year interest
rate of a standard fixed-rate mortgage) when she/he selects an adjustable rate mortgage.
Why (5 points)? Note: I will only read your first 30 words.
2.
3.
4.
Why would one expect that the cash-equivalent value of an assumable loan would not be
fully capitalized into the house prices (10 points)?
5.
Explain what interest only (IO) and principal only strips are (5 points). Which strip, the
IO strip or the PO strip, is said to have negative duration (1 point)? Why (4 points)?
6.
State and explain the two theories of default (2 points). Which theory makes more
"intuitive" sense (3 points)?
Take-home component:
1.
Please re-construct the amortization tables of the five ARMs discussed in class. In
addition, please extend the period from 37 months (as shown in my handouts) to 61
months. Please calculate the monthly IRR and MIRR (FMRR) for each of the 5 ARMs
listed in problem 1 (20 points).
2.