In a market study, an appraiser reports the ratio of closed sales during a period to active listings at the start of that period. The period has 18 closed sales and 90 starting active listings. What is the ratio?
Correct Answer
B) 0.20
Ratio = 18 closed sales / 90 starting active listings = 0.20. Keep the stated numerator, denominator and units distinct. Common errors: inverting the ratio (listings ÷ sales) gives 5.00; dividing by listings plus sales gives 0.17; reporting the complement instead of the ratio gives 0.80.
Why This Is the Correct Answer
Option B is correct because the defined fraction is closed sales divided by starting active listings. That is 18/90 = 0.20. No other counts are added to the denominator under this definition.
Why the Other Options Are Wrong
Option A: 0.17
Option A, 0.17, divides by listings plus sales: 18/(90 + 18) = 18/108 = 0.17. The definition uses only the 90 starting active listings, giving 18/90 = 0.20.
Option C: 0.80
Option C, 0.80, reports the complement instead of the fraction: (90 − 18)/90 = 0.80. The question asks for closed sales over starting listings, which is 18/90 = 0.20.
Option D: 5.00
Option D, 5.00, inverts the ratio by dividing listings by sales: 90/18 = 5.00. The defined fraction puts sales on top, so the result is 18/90 = 0.20.
Follow the stated recipe
When a ratio is defined in the question, the first item named goes on top and the second goes on the bottom. Do not add ingredients.
How to use: Use this reminder whenever a question defines its own statistic.
Exam Tip
Read the definition word by word and write it as a fraction before calculating. Distractors often invert it or change the denominator.
Common Mistakes to Avoid
- -Inverting the ratio to listings divided by sales
- -Adding sales to the listings in the denominator
- -Reporting the unsold share instead of the defined fraction
Concept Deep Dive
Analysis
This question tests applying a custom ratio exactly as defined. The fraction is closed sales during the period divided by active listings at the period's start, so 18/90 = 0.20. Keep the numerator and denominator in the stated order and do not add or subtract other counts.
Background Knowledge
Inventory measures relate sales activity to the supply of listings. This ratio is a period fraction, which differs from an absorption rate stated in units per month or from months of supply. When a question gives a definition, that definition governs the calculation.
Real-World Application
An appraiser tracking a small condo segment notes 90 active listings at the start of a quarter and 18 closed sales during it. Dividing 18 by 90 shows that sales equaled 20 percent of the opening inventory. The appraiser presents this alongside monthly absorption data, labeling each measure clearly.
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