Pennsylvania Auctioneer Practice Exam

List the four components of an "arm's length transaction".

1. A. Physical, functional, economic

2. B. Duress, exposed, aware

3. C. No undo influence, exposed, aware, unusual

4. D. Voluntary alienation, involuntary alienation, by will, by descent

The correct answer is: C. No undo influence, exposed, aware, unusual

An "arm's length transaction" is a transaction where the parties involved are acting independently, with no undue influence, and are fully aware of the transaction details. The four components of an "arm's length transaction" are: 1. No undue influence: This means that both parties are acting of their own free will, without any coercion or pressure from the other party. 2. Exposed: Both parties are fully informed about the transaction, including all relevant information and details. 3. Aware: Both parties have a clear understanding of the transaction, its implications, and the risks involved. 4. Unusual: The transaction is not out of the ordinary or unusual in any way and represents a fair market value exchange between the parties. Options A, B, and D do not accurately represent the four components of an "arm's length transaction" and are therefore incorrect. Option C (No undue influence, exposed, aware, unusual) correctly lists the key components of an "arm's length transaction," making it the correct answer.