Question

You would expect market price to equal market value if the

a. parties to the sale were related
b. sale was a foreclosure
c. sale was made with an anticipation of change in use (zoning change)
d. transaction was arm's length

Answer 1

In an arm's length transaction, the market price and market value are more likely to be equal because both parties negotiate based on the fair market value of the product or asset being sold.

Step-by-step explanation:

In a market transaction, the market price and market value may not always be equal. However, in an arm's length transaction, where the buyer and seller are unrelated and have no personal or business relationship, it is more likely that the market price and market value will be equal.

An arm's length transaction is considered more reliable because both parties are motivated to get the best deal possible. Therefore, they negotiate based on the fair market value of the product or asset being sold.

For example, if a house is being sold in an arm's length transaction, the market value of the house would be the price at which the buyer and seller agree to buy and sell the property.