Which Major Asset Experienced a Price Bubble Just Before the Housing

question 70

Multiple Choice

Which major asset experienced a price bubble just before the housing price bubble of 2006-2009?

• A) Internet or tech-stocks
• B) Tulip bulbs
• C) Japanese real estate
• D) Railroad stocks

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Definitions:

Operating Costs

The expenses associated with the day-to-day functions of a business, excluding the costs of goods sold, such as rent, utilities, and payroll.

Internal Rate of Return

A financial metric used to evaluate the profitability of an investment, representing the interest rate at which the net present value of all cash flows (both positive and negative) from a project or investment equal zero.

Straight-Line Depreciation

An operation for dividing the expense of a solid asset through its functional duration in even yearly sums.

Simple Rate of Return

A calculation that estimates the profitability of an investment, dividing annual incremental net operating income by the initial investment cost.