M-206 EXAM 2025 QUESTIONS WITH 100% CORRECT
ANSWERS.
Duty of Care Answer - Requires a board if director to act in a reasonable and
informed manner when participating in the Boards decisions and its oversight
of the day to day operations
Duty of Loyalty Answer - Requires the Director to exercise power in good faith
and in best interest of the community rather than the directors own interest of
the interest of another person or entity.
Identify budget line items Answer - Obligation, need, expectation
Types of budget line items Answer - Mandatory, discretionary
Contingency planning rule of thumb minimum Answer - 2-5%
Contingency planning rule of thumb very good Answer - 10-15%
Historical trend budgeting Answer - Estimates line items based on past trends
Zero based budgeting Answer - Budgeting that ignores historical budgetary
allocations and identifies the cost that are necessary to implement agreed
strategies- verified need for a budgeted line item
, RxQxTxN Answer - Ratexquantityxtimexnumber
Basis in estimating individual line items for zero based budgeted Answer -
Rate, quantity, time, number
Two parts of reserve study Answer - Physical and financial analysis
Baseline funding Answer - Reserve funding goal of keeping the reserve cash
balance above zero
Full funding Answer - 100% funded
Threshold funding Answer - Keeping the reserve balance above a specified
dollar or precent funded amount
Statutory funding Answer - Method based on local statutes
The concept of basic investment principles Answer - The board of directors,
supported with the advice of the manager, has a fiduciary responsibility to all
unit owners to make sure reserve funds are invested properly
Investment concepts - safety Answer - The likelihood that anticipated income
from an investment will continue to be paid in the amount expected and at the
time expected
Investment concepts - liquidity Answer - Liquid investments can be converted
quickly into cash for emergency use or investment opportunities
Investment concepts - yield Answer - The return received in the investment
ANSWERS.
Duty of Care Answer - Requires a board if director to act in a reasonable and
informed manner when participating in the Boards decisions and its oversight
of the day to day operations
Duty of Loyalty Answer - Requires the Director to exercise power in good faith
and in best interest of the community rather than the directors own interest of
the interest of another person or entity.
Identify budget line items Answer - Obligation, need, expectation
Types of budget line items Answer - Mandatory, discretionary
Contingency planning rule of thumb minimum Answer - 2-5%
Contingency planning rule of thumb very good Answer - 10-15%
Historical trend budgeting Answer - Estimates line items based on past trends
Zero based budgeting Answer - Budgeting that ignores historical budgetary
allocations and identifies the cost that are necessary to implement agreed
strategies- verified need for a budgeted line item
, RxQxTxN Answer - Ratexquantityxtimexnumber
Basis in estimating individual line items for zero based budgeted Answer -
Rate, quantity, time, number
Two parts of reserve study Answer - Physical and financial analysis
Baseline funding Answer - Reserve funding goal of keeping the reserve cash
balance above zero
Full funding Answer - 100% funded
Threshold funding Answer - Keeping the reserve balance above a specified
dollar or precent funded amount
Statutory funding Answer - Method based on local statutes
The concept of basic investment principles Answer - The board of directors,
supported with the advice of the manager, has a fiduciary responsibility to all
unit owners to make sure reserve funds are invested properly
Investment concepts - safety Answer - The likelihood that anticipated income
from an investment will continue to be paid in the amount expected and at the
time expected
Investment concepts - liquidity Answer - Liquid investments can be converted
quickly into cash for emergency use or investment opportunities
Investment concepts - yield Answer - The return received in the investment
