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FIN 402 Test Questions with accurate detailed solutions
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________ offers investors an opportunity to take a high risk and potentially receive a high
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reward in a short holding period, while ______ in real estate typically extends for a longer
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holding period. - ✔✔Speculation; Investment
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________ is a slow down in business activity when competition increases as businesses vie
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for their share of a dwindling customer base. - ✔✔Recession
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At the onset of the ______ stage of the business cycle, the unemployment rate will fall,
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wages will rise, consumer demand will return, and prices will climb - ✔✔Recovery
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A ______ involves a widespread reduction in business activity, increased unemployment,
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lower wages, and a decline in stock values - ✔✔Depression
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During ______ production increases, banks are willing to lend funds, and consumer
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demand is at a high, as are prices. - ✔✔Prosperity
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The peaks and valleys of the real estate cycle are typically ______ pronounced when
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compared to the business cycle. - ✔✔More || || || || || ||
In response to the business cycle, the real estate market rises and falls in four major
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phases... - ✔✔Overbuilding —-> Adjustment —> Stabilization —> Development
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__________ is the increase in the average level of prices, or equivalently, a decrease in the
|| || || || || || || || || || || || || || || ||
value of money - ✔✔Inflation
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, 2
In a stabilized market, when interest rates are low to moderate, real estate value is greater
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relative to income. - ✔✔True
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Foreign investment in the United States is expected to _______. - ✔✔Increase
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________ measures changes in prices paid by consumers for particular goods and services -
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✔✔Consumer Price Index (CPI) || || ||
Commingling of Funds is _________. - ✔✔Illegal in many states and a violation of the
|| || || || || || || || || || || || || || ||
IREM Code of Ethics
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The formula for determining how CPI alters rent - ✔✔Look up later
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___________ accounting recognizes income when it is actually received and all expenses
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when they are paid. - ✔✔Cash-Basis
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__________ accounting recognizes income when it is due and expenses when they are
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incurred, but records may not show actual receipts and disbursements - ✔✔Accrual-Basis
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Which of the following is true regarding budgets - ✔✔They can be used to forecast income
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Which of the following is the most accurate description of a budget? - ✔✔A statement
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itemizing the projection of income and expenses for a specific period for a particular
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property or institution || ||
Which of the following is a reason to incorporate zero-based budgeting in the budgeting
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process? - ✔✔Past budget figures may be unreliable
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FIN 402 Test Questions with accurate detailed solutions
|| || || || || || ||
________ offers investors an opportunity to take a high risk and potentially receive a high
|| || || || || || || || || || || || || || ||
reward in a short holding period, while ______ in real estate typically extends for a longer
|| || || || || || || || || || || || || || || ||
holding period. - ✔✔Speculation; Investment
|| || || ||
________ is a slow down in business activity when competition increases as businesses vie
|| || || || || || || || || || || || || ||
for their share of a dwindling customer base. - ✔✔Recession
|| || || || || || || || ||
At the onset of the ______ stage of the business cycle, the unemployment rate will fall,
|| || || || || || || || || || || || || || || ||
wages will rise, consumer demand will return, and prices will climb - ✔✔Recovery
|| || || || || || || || || || || ||
A ______ involves a widespread reduction in business activity, increased unemployment,
|| || || || || || || || || || ||
lower wages, and a decline in stock values - ✔✔Depression
|| || || || || || || || ||
During ______ production increases, banks are willing to lend funds, and consumer
|| || || || || || || || || || || ||
demand is at a high, as are prices. - ✔✔Prosperity
|| || || || || || || || ||
The peaks and valleys of the real estate cycle are typically ______ pronounced when
|| || || || || || || || || || || || || ||
compared to the business cycle. - ✔✔More || || || || || ||
In response to the business cycle, the real estate market rises and falls in four major
|| || || || || || || || || || || || || || || ||
phases... - ✔✔Overbuilding —-> Adjustment —> Stabilization —> Development
|| || || || || || || ||
__________ is the increase in the average level of prices, or equivalently, a decrease in the
|| || || || || || || || || || || || || || || ||
value of money - ✔✔Inflation
|| || || ||
, 2
In a stabilized market, when interest rates are low to moderate, real estate value is greater
|| || || || || || || || || || || || || || || ||
relative to income. - ✔✔True
|| || || ||
Foreign investment in the United States is expected to _______. - ✔✔Increase
|| || || || || || || || || || ||
________ measures changes in prices paid by consumers for particular goods and services -
|| || || || || || || || || || || || || ||
✔✔Consumer Price Index (CPI) || || ||
Commingling of Funds is _________. - ✔✔Illegal in many states and a violation of the
|| || || || || || || || || || || || || || ||
IREM Code of Ethics
|| || ||
The formula for determining how CPI alters rent - ✔✔Look up later
|| || || || || || || || || || ||
___________ accounting recognizes income when it is actually received and all expenses
|| || || || || || || || || || || ||
when they are paid. - ✔✔Cash-Basis
|| || || || ||
__________ accounting recognizes income when it is due and expenses when they are
|| || || || || || || || || || || || ||
incurred, but records may not show actual receipts and disbursements - ✔✔Accrual-Basis
|| || || || || || || || || || ||
Which of the following is true regarding budgets - ✔✔They can be used to forecast income
|| || || || || || || || || || || || || || ||
Which of the following is the most accurate description of a budget? - ✔✔A statement
|| || || || || || || || || || || || || || ||
itemizing the projection of income and expenses for a specific period for a particular
|| || || || || || || || || || || || || ||
property or institution || ||
Which of the following is a reason to incorporate zero-based budgeting in the budgeting
|| || || || || || || || || || || || || ||
process? - ✔✔Past budget figures may be unreliable
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