Chapter 2

1. A hypothesis is a statement of belief suggested by fundamental theory.

True / False

2. The financial paradigm assumes real estate to be a capital asset defined by the CF it generates and the markets that trade these CF’s.

True / False

3. A theory is a formal statement of what a research community knows to be true.

True / False

4. Knowledge is known as the output of descriptive research that is consistent with suggestive theory.

True / False

5. The costs incurred by principals when those acting on their behalf which have a conflict of interest and therefore incentive not to act in the best interest of their principals are called agency cost.

True / False

6. A shortcut used in making numerical judgments, usually subconsciously employed and occurring when the person making the judgment is influenced by a previously suggested or introduced number.

a) Heuristics

b) Anchoring

c) Bounded rationality

d) Controlled experiment

7. Which is the applied discipline focused on the study of the allocation of scarce resources?

a) Finance

b) Economics

c) Social Science

d) Engineering

8. Finance is

a) the applied discipline whose focus is the study of the allocation of scarce resources over time.

b) the activity which aim is to reveal and describe natural phenomena.

c) the discipline descriptively focused on some aspect of how human society started and continues to function and develop.

d) the academic activity whose aim is to develop technologies to improve what actually is.

Answer:

True, True, False, True, True, b), b), a)