Real Estate Practice Chapters 1 - 15 (Exam Prep Text)

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An example of a closed-ended question, would be "Whose bedroom would this be?" "Isn't this a large living room?" "Would you use this room as a bedroom or a den?" "What do you think of the floor plan?"

"Isn't this a large living room?" Can be answered with a "yes" or "no."

Which of the following is an example of a tie-down? "What would you use this pantry for?" "Would you prefer to buy now or think it over?" "Can you afford this house?" "This is an exceptionally large kitchen, isn't it?"

"This is an exceptionally large kitchen, isn't it?" You get a series of "yes" answers.

An example of an open-ended question would be "Can you afford a $1,500 house payment?" "What do you like about this neighborhood?" "Is there any more information you would like?" "Do you like this house?"

"What do you like about this neighborhood?" ou want an explanation, not "yes" or "no" answers.

The fine for making a single unauthorized solicitation call to a residential number listed on the do-not-call registry can be up to $16,000 $110 $1,100 $11

$16,000 Per call.

Written notice that the amount of commission is negotiable is required in listings of 1 to 4 residential units. every nonresidential listing. every residential listing. every listing.

listings of 1 to 4 residential units. This fact is required by law to appear in the listing agreement for properties of 1-4 residential units.

Redlining refers to a refusal to cooperate with other agents in designated areas. list in designated areas. advertise in designated areas. loan in designated areas.

loan in designated areas. Prohibited by Civil Rights Act of 1968 and the Holden Act.

A broker may discriminate against a tenant who has AIDS. neither has AIDS nor has a guide dog. has a guide dog. both has AIDS and has a guide dog.

neither has AIDS nor has a guide dog. Both protected by 1988 Amendment.

If members of a minority racial or ethnic group live in the neighborhood of a home you are showing failure to mention the presence of the group would make you liable for any damages the buyer suffered. neither you must mention this to a prospective buyer nor failure to mention the presence of the group would make you liable for any damages the buyer suffered. you must mention this to a prospective buyer. both you must mention this to a prospective buyer and failure to mention the presence of the group would make you liable for any damages the buyer suffered.

neither you must mention this to a prospective buyer nor failure to mention the presence of the group would make you liable for any damages the buyer suffered. It should not matter. Mentioning it could be steering.

A reverse directory allows an agent to have the owner's name from the tax number. occupant's name from the address. legal description from the address. address from the occupant's name.

occupant's name from the address. Address to occupant directory.

The broker did not give the principal a copy of the listing. The broker did not violate law or regulations because the listing was an exclusive right to represent listing. exclusive right to sell net listing. exclusive agency listing. open listing.

open listing. Only required for exclusive listings.

A geographic farm could be a particular ethnic group. special interest of buyers. type of property. particular subdivision.

particular subdivision. Physical boundaries.

Real estate disclosure laws apply primarily for 1 to 4 residential units. to disclosures to principals only. to buyer disclosure only. uniformly to all real estate transactions.

primarily for 1 to 4 residential units. Such as a Transfer Disclosure Statement.

For effective communication it is BEST to use technical terms wherever possible. talk fast if the customer talks slowly. provide sufficient facts so the receivers can form valid conclusions. sell the item, not the benefits.

provide sufficient facts so the receivers can form valid conclusions. You should be selling the benefits so they are understood.

The CAN-SPAM Act applies to restrictions on e-mail solicitations. direct mail solicitations. home solicitation phone calls. unsolicited fax messages.

restrictions on e-mail solicitations. Requires a subject heading, indicating that it is an advertisement with an opt-out mechanism, etc.

A major reason owners attempt to sell without an agent is to have a quicker sale. avoid seller disclosures. save paying the commission. get a higher gross price.

save paying the commission. They hope to keep fee for themselves.

What would be a word or words to use in a listing presentation that denotes a benefit? Agency representation Commission Cost Listing

Agency representation Listing has a connotation of paying a commission.

Owner Adams has a listing in force with Broker Baker. Owner Adams sold the house without the aid of Broker Baker. What kind of listing did Broker Baker have if Owner Adams has no commission obligation to Broker Baker? Exclusive right-to-sell Exclusive agency Either Open or Exclusive agency Open

Either Open or Exclusive agency A commission paid only if agent makes sale.

Which of the following statements regarding ethics is TRUE? Ethics and good business are not compatible. Ethics tends to precede the law. If it is legal, it is ethical. If it is unethical, it is illegal.

Ethics tends to precede the law. What is legal but unethical now might be illegal tomorrow.

A broker never saw, talked to, or corresponded with a buyer, yet earned a commission. What type of listing did the broker have? Exclusive agency listing Open listing Exclusive authorization to acquire real property listing Any of these

Exclusive agency listing If any agent sells the listing, the agent is paid.

Prospecting from legal notices can be effective. Which of the following is NOT a legal notice? Probate Code violations For Sale By Owner Evictions

For Sale By Owner Not in a legal paper.

Redlining is prohibited by the Unruh Act. Rumford Act. Brown Act. Holden Act.

Holden Act. And the Civil Rights Act of 1968.

The following statements are all examples of abstract goals EXCEPT I will obtain three new listings each month. I will strive to improve my sales techniques. I will become a better salesperson. I will improve my communication skills.

I will obtain three new listings each month.

A Transfer Disclosure Statement must be provided to the buyer when the sale involves a 3-unit residential building. all of these. a commercial building. a vacant lot.

a 3-unit residential building. 1 to 4 residential.

An open house was held on a property needing many obvious repairs. The property was most likely advertised as a fixer-upper. a model home. a family-oriented home. an estate.

a fixer-upper. To attract bargain buyers.

If you are going to be buying a new car for real estate sales, you should consider as expensive a car as possible to impress others. a two-door model to control the passengers. a full-sized, four-door car for easy entrance and exit. a sports car to show you are a modern person.

a full-sized, four-door car for easy entrance and exit.

The proper order of the steps taken in agency disclosure is confirm, elect, disclose. disclose, elect, confirm. elect, disclose, confirm. elect, confirm, disclose.

disclose, elect, confirm. Disclose as soon as possible, confirm with offer.

When showing property, an agent should allow the prospective buyers to bring along a friend or confidant. do all of these. allow buyers a chance to confer without the agent being present. try to overcome objections raised.

do all of these.

Using time-management to increase income, you should realize that you should concentrate on "D" category activities before proceeding to "B" and "C" activities. you should divide your time equally between "A," "B," "C," and "D" category activities. doubling "A" time activities should double your income. you should concentrate more on possibilities than probabilities.

doubling "A" time activities should double your income.

Non-geographic farms include a particular mobile home park. a particular subdivision. ethnic groups. properties in close proximity.

ethnic groups. Also type of property.

The period that tends to be the most productive sales period for listings is the third month of a six-month listing. first month of the second listing extension. first 20 days of the listing. last 20 days of the listing.

first 20 days of the listing. New listings excite agents and buyers.

A property brief is a flyer pointing out attractive features about a property. settlement sheet issued on closing a transaction. bare-bones classified ad on a property. procedure for showing a property to prospective buyers.

flyer pointing out attractive features about a property.

A fiduciary relationship applies to a real estate licensee and to all parties the agent has dealings with. buyers only. the Bureau of Real Estate. his or her principal.

his or her principal. Relationship of Trust.

The phrase "centers of influence" refers to institutions within an area that influence behavior. influential people in the community. the factor that makes a neighborhood cohesive. properties that set the neighborhood value.

influential people in the community. Who can help you in prospecting.

A billboard that states "Thomas Realty—A Name You Can Trust" would be regarded as demand advertising. specific advertising. operational advertising. institutional advertising.

institutional advertising. Sells the firm, not a specific property.

he reason most mentioned by owners for NOT renewing listings is the commission was too high. the price was too high. the condition of the property. lack of communication from the agent.

lack of communication from the agent. Owners want to know what is happening.

A listing office typically gives 50% of the gross commission to the selling office and splits the remainder with 40% to the broker and 60% to the listing salesperson. Salesperson Andrew's listing was sold by another office for $189,500. Assuming a 6% commission, Salesperson Andrew's share would be: $11,370.00. $2,842.50. $3,411.00. $5,685.00.

$3,411.00. 6% of $189,500 = $11,370. 50% of $11,370 = $5,685. 60% of $5,685 = $3,411.

What are the advantages of a good time-management program? Improved efficiency A release from time pressures Increased income All of these

All of these

To be enforceable, which element is required in an exclusive right-to-sell listing? Lawful purpose All of these Consideration Writing

All of these Contract requirements plus Statute of Frauds.

Which of the following should an agent regard as a buying signal? All of these A reluctance to leave a property An inquiry as to when possession would be possible The statement, "The price seems a little high."

All of these These are words or actions indicating an interest.

Which of the following statements regarding display advertising is TRUE? All of these. Ads in an outside column will generate more interest than ads in an inside column. Lowercase letters are easier to read than capital letters. Inclusion of white space serves to emphasize a message.

All of these. Attracts attention and is easy to read.

Which of the following statements regarding display advertising is TRUE? More than two typefaces in an ad will likely have a negative effect on the ad. One large picture is generally more effective than several smaller pictures. All of these. Most people read from the upper left to the lower right corner when looking at an ad.

All of these. Make message clear.

Which of the following statements regarding the truth-in-lending law is TRUE? Agents must advertise their names and license status. None of these. Bait-and-switch advertising is a federal offense. If the agent advertises the APR, the agent must include all credit terms.

Bait-and-switch advertising is a federal offense. Advertising a property that is not available and you won't sell so you can find buyers that you hope to switch to other properties.

Which of the following statements regarding mobile home sales is TRUE? Both A real estate agent can sell a mobile home in a rental park space and A real estate agent can sell a mobile home with the land it is sited on. A mobile home must be at least 2 years old for a real estate agent to sell it. A real estate agent can sell a mobile home with the land it is sited on. A real estate agent can sell a mobile home in a rental park space.

Both A real estate agent can sell a mobile home in a rental park space and A real estate agent can sell a mobile home with the land it is sited on.

The Civil Rights Act that applied only to race was the Civil Rights Act of 1968. Unruh Act. Civil Rights Act of 1866. Rumford Act.

Civil Rights Act of 1866. The Civil Rights Act of 1866 gave rights to recently freed slaves. The Civil Rights Act of 1968 prohibited discrimination in housing based on national original, race, religion, and color.

What type of listing is legal in California, but is considered illegal in some other states? Open Net Exclusive right-to-sell Exclusive agency

Net Legal but unethical.

Which of the following statements regarding selling time is TRUE? Properties listed above market value tend to sell faster than properties listed at prices closer to market value. None of these. Because buyers seldom offer the list price, the list price has no effect on time to sell. Properties listed below market value tend to take longer to sell than properties listed at market value.

None of these. Direct relationship between list price and time to sell.

Which of the following statements regarding the use of goal-setting is FALSE? Goals should be put in writing. Goals should be attainable. Once set, goals should never be changed. You should tell someone about your goals.

Once set, goals should never be changed.

Which of the following listings does NOT require the agent to use diligence to locate a buyer? Exclusive agency Open Net Exclusive right-to-sell

Open It is a unilateral contract and the agent has not agreed to use diligence.

Which promotion would have the lowest cost to the broker? Yellow pages of a telephone directory Billboard Direct mail Press release

Press release It's a free ad.

As an indication of value, which of the following would BEST indicate the market value of a home? Similar properties sold within the past 3 months Listings that expired unsold Similar properties sold within the past 2 years Current listings for similar properties

Similar properties sold within the past 3 months Recent data is most reliable.

What is the best test to evaluate if an act is ethical? Is it legal? Is it in my best interests? The Golden Rule Are others doing it?

The Golden Rule How would you want to be treated?

Telephone responses from a For Sale sign indicate what about the prospective buyer? None of these. The caller can afford the home and area or they would not have called. If the price quoted is too high, you can be sure the caller will let the agent know. The caller may want a lower-priced property.

The caller may want a lower-priced property. They like it and hope they can afford it.

The California Act that prohibits discrimination by all California businesses is the Rumford Act. Brown Act. Holden Act. Unruh Act.

Unruh Act. Applies to businesses only.

The owner should understand the broker's advertising policy, including the fact that a(n): ad will cover every major feature of a house. display ad should be used to impress home-seekers. ad within a price range or area creates prospects for other homes in the price range or area. broker that fails to advertise a property every week is not doing a proper job of advertising.

ad within a price range or area creates prospects for other homes in the price range or area. Advertising one property brings in buyers for other properties.

Benefits that an owner receives by listing with an agent include qualification of prospects. promotion and advertising paid by the agent. the benefit of multiple listing. all of these.

all of these. Agents sell while owners seldom sell themselves.

Advantages of holding open houses include locating prospective buyers. showing owners you are working on their behalf. all of these. obtaining listings from visitors.

all of these. Although (C) is least important.

A listing presentation manual should include all of these. information about yourself. benefits of listing. information about your firm.

all of these. Must sell owner on a listing and on you and your firm.

The Seller Financing Disclosure Statement provided to both buyer and seller provides a warning as to balloon payments. all of these. disclosure of deferred interest. credit terms.

all of these. Plus credit information, cash out sellers, warnings, etc.

The Real Estate Commissioner's suggestions for professional conduct include that the agent stay in close communication with clients or customers. all of these. report violations of the real estate law to the Bureau of Real Estate. submit all written offers in a prompt and timely manner.

all of these. These are suggestions not necessarily legal duties.

In meeting a buyer's objections the agent should consider conceding before answering. meeting objections half-way. all of these. welcoming the objections.

all of these. These show that you understand the buyer's concerns.

Motives for buying include comfort and convenience. love of family. health. all of these.

all of these. They vary among buyers.

An agent's inspection under Easton v. Strassburger (as codified by state statutes) applies to visual inspections. 1 to 4 residential units. all of these. accessible areas only.

all of these. With reasonable expertise of a licensee.

A listing where the licensee is subject to disciplinary action for demanding a fee would be an open listing. a listing where the agent was not authorized to accept a deposit. a listing having a safety clause. an exclusive listing without a termination date.

an exclusive listing without a termination date. Must have a definite termination date. pg. 266

Disadvantages of home-ownership include all of the following EXCEPT lack of liquidity. greater responsibility. appreciation. risk.

appreciation This is a significant benefit.

When dealing with a prospect who is silent, the BEST approach would be to do all the talking yourself. remain silent to force the prospect to talk. speed up your presentation. ask leading questions.

ask leading questions. Find out what prospect thinks.

The "endless chain" refers to always selling a new home to the seller. prospecting your farm area on a continuous basis. staying with a prospect until you have a contract. asking every prospect to recommend another prospect.

asking every prospect to recommend another prospect. With a constant stream of prospects.

The advertising acronym AIDA stands for ask, interact, demonstrate, approve. ask, inform, demonstrate, approve. attention, interest, desire, action. attention, interest, demand, action.

attention, interest, desire, action. What a good ad should do.

If your firm is small, to obtain a listing when competing against a large firm you should emphasize that you need it more than the large firm. you will work just as hard as the large firm. because you concentrate on a small number of select properties, you are able to give more individual attention to the property. it is better to help small businesses.

because you concentrate on a small number of select properties, you are able to give more individual attention to the property. Turn perceived negative into a positive.

A selling agent must comply with agency disclosures to the buyer upon delivery of the seller's acceptance. before the buyer executes an offer. prior to qualifying the buyer. prior to showing property.

before the buyer executes an offer. It is included in offer form.

A sale would MOST likely be killed by supporting statements with facts. appearing confident. mentioning a potential objection before the customer does. being over-eager to close.

being over-eager to close. Buyers resist pressure before they are ready.

By initialing the dispute resolution clause in the exclusive right-to-sell listing the seller and broker agree to arbitrate disputes if directed to by the court. binding arbitration of disputes. nonbinding arbitration of disputes. waive their rights to arbitrate.

binding arbitration of disputes. If not initialed, then the matter can go to the courts.

An agent need not disclose to a buyer that: both a former owner had AIDS or there was a death by murder or suicide on the property more than 3 years ago. there was a death by murder or suicide on the property more than 3 years ago. a former owner had AIDS. neither a former owner had AIDS nor there was a death by murder or suicide on the property more than 3 years ago.

both a former owner had AIDS or there was a death by murder or suicide on the property more than 3 years ago. But the law is unclear as to the need to disclose for deaths within three years.

Serious buyers contact real estate agents because neither agents have inventory nor they want to quickly locate property that meets their needs. they want to quickly locate property that meets their needs. agents have inventory. both agents have inventory and they want to quickly locate property that meets their needs.

both agents have inventory and they want to quickly locate property that meets their needs. It saves time and buyers don't have to deal with owners directly.

The earthquake safety disclosure statement both applies to 1 to 4 residential units and must be signed by buyer and seller. is voluntary. must be signed by buyer and seller. applies to 1 to 4 residential units.

both applies to 1 to 4 residential units and must be signed by buyer and seller. Residential Earthquake Hazards Report.

The Civil Rights Act of 1968 prohibits both blockbusting and steering. blockbusting. neither blockbusting nor steering. steering.

both blockbusting and steering. As well as redlining.

The likelihood of a sale within 90 days is decreased by listing above the market value. increased by a list price below that indicated by the comparative market analysis. both increased by a list price below that indicated by the comparative market analysis and decreased by listing above the market value. none of these.

both increased by a list price below that indicated by the comparative market analysis and decreased by listing above the market value. Buyers are attracted to bargains, not overpriced property.

When you receive For Sale sign inquiries you can assume that the caller both is satisfied with the general appearance of the home and is satisfied with the area. neither is satisfied with the general appearance of the home nor is satisfied with the area. is satisfied with the area. is satisfied with the general appearance of the home.

both is satisfied with the general appearance of the home and is satisfied with the area. But the caller might not be able to afford the property.

In real estate we have learned that it is best to advertise properties in areas or price ranges where other properties are also available. neither it is best to advertise properties in areas or price ranges where other properties are also available nor prospective buyers who respond to newspaper ads are likely to buy a property other than the property advertised. prospective buyers who respond to newspaper ads are likely to buy a property other than the property advertised. both it is best to advertise properties in areas or price ranges where other properties are also available and prospective buyers who respond to newspaper ads are likely to buy a property other than the property advertised.

both it is best to advertise properties in areas or price ranges where other properties are also available and prospective buyers who respond to newspaper ads are likely to buy a property other than the property advertised Having the ability to switch property is important.

The purpose of a broker providing a sliding commission scale that rises as sales volume increases is to neither motivate salespeople nor retain top producers. both motivate salespeople and retain top producers. motivate salespeople. retain top producers.

both motivate salespeople and retain top producers.

In preparing estimated seller proceeds, you should remember that because owners want to get as much as possible, you should underestimate costs so the net will be greater. it is better to estimate costs a little on the high side than the low side. owners who get less than they expected to receive from a sale are likely to be unhappy with you. both owners who get less than they expected to receive from a sale are likely to be unhappy with you and it is better to estimate costs a little on the high side than the low side.

both owners who get less than they expected to receive from a sale are likely to be unhappy with you and it is better to estimate costs a little on the high side than the low side. An unhappy seller could mean a sale that does not close.

In advertising a fixer-upper property people are attracted to fixer-upper ads because they sense a bargain. the worse you make the property appear, the greater your response is likely to be. it is best not to mention any problems with the property. both the worse you make the property appear, the greater your response is likely to be and people are attracted to fixer-upper ads because they sense a bargain.

both the worse you make the property appear, the greater your response is likely to be and people are attracted to fixer-upper ads because they sense a bargain. The opposite of most advertising.

One of the requirements for a real estate salesperson to be regarded as an independent contractor by the IRS is that the broker-salesperson contract states that the salesperson shall be treated as an independent contractor for tax purposes. salesperson is paid a salary. salesperson is not responsible to a broker. salesperson is not supervised by the broker

broker-salesperson contract states that the salesperson shall be treated as an independent contractor for tax purposes.

First-time visits to new listings by groups of agents are commonly known as visitations. firsts. pre-showings. caravans.

caravans MLS agents in lines of cars.

A comparative market analysis would be LEAST valuable in indicating market value for a single-family residence. condominium. commercial property. vacant lot.

commercial property. Need adequate number of comparable sales.

In advertising, the real estate agent should know that it is illegal to use abbreviations such as "Agt." or "Bro." instead of the name of the firm. include credit terms. all of these. conceal the fact that the advertiser is an agent.

conceal the fact that the advertiser is an agent. But any indication, like "Agt.," meets the requirement.

If a prospective buyer intends to occupy a single-family home as a residence, the agent should realize this fact could have a direct bearing on the date of occupancy. what will be regarded as personal property. damages, should the buyer default. the request for notice of default.

damages, should the buyer default. Liquidated damages are limited by law.

When a caller won't give a name, the best approach would be to hang up. say, "I'm sorry; office policy prohibits me from discussing any properties if I don't know with whom I am talking." say, "I will give you the address if you give me your name." say, "Would it be all right if I sent you some information and photos of that property and several others?"

say, "Would it be all right if I sent you some information and photos of that property and several others?" It is not threatening and most will agree.

When showing a property to a prospective buyer, the agent should have a hard and fast rule to never show more than three properties. show the prospective buyers homes they have listings for in order to please the owners of those listings. show buyers homes they cannot afford to impress them with the caliber of homes to which the agent has access. show unoccupied property first to give owner-occupants a chance to prepare for the showing.

show unoccupied property first to give owner-occupants a chance to prepare for the showing. And get buyer reactions which might alter showings.

Advertising a home in an area occupied solely by members of a minority group only in newspapers directed toward that minority group would be regarded as redlining. subordination. steering. blockbusting.

steering. Directing to properties based on race.

You can find out how things are done in your office by going on caravans. studying your office procedure manual. checking the regulations of the Bureau of Real Estate. reading the information on the back of your real estate license.

studying your office procedure manual.

Compliance with environmental hazards disclosure requires the buyer sign that they have received a booklet titled Environmental Hazards: A Guide for Homeowners, Buyers, Landlords, and Tenants. that the seller post a bond to cover damages by hazards discovered at a later date. that the Alquist-Priolo Act be complied with. chemical tests of the soil for all dangerous contaminants.

the buyer sign that they have received a booklet titled Environmental Hazards: A Guide for Homeowners, Buyers, Landlords, and Tenants. Explains possible hazards.

The best heading for a classified ad on a home would be the name of the agent to call. a blank space since it attracts attention. the most desirable feature. the firm's logo.

the most desirable feature. To catch the eye of buyers who desire that feature.

The front-end ratio is the down payment divided by the purchase price. the total monthly housing payment divided by the gross monthly income. the total dollar costs to take possession. none of these.

the total monthly housing payment divided by the gross monthly income. Usually 28 percent for qualifying.

If a listing is overpriced, the agent should suggest to the owners that the house is not worth the price. they adjust the price to the current market. they agree to take less for their home. they extend the listing for a longer period as price is related to time to sell

they adjust the price to the current market. Adjust does not have the connotation of lowering.

The back-end ratio is the the monthly gross income divided by the amount to be financed. ratio of current rental costs to estimated housing costs. ratio of net income to PITI. total monthly housing expenses plus monthly long-term credit obligations divided by gross monthly income.

total monthly housing expenses plus monthly long-term credit obligations divided by gross monthly income. Usually 36 percent for qualifying.

When arriving at a property for a showing, if another agent is showing the property, you should tell your prospects that they had better act fast as you are sure the other party wants to buy the house. introduce yourself and your buyers to the other agent and go ahead with your showing. ignore the other agent and go ahead with your showing. wait to show the property until the other agent has left.

wait to show the property until the other agent has left. Common courtesy.

Instructions to an owner upon taking a listing should include all EXCEPT make beds early in the day. when property is shown, follow the agent closely and provide information to the prospective buyers. make needed repairs. avoid cooking with foods having strong and lasting odors.

when property is shown, follow the agent closely and provide information to the prospective buyers. Owner's presence inhibits buyers.

Brokers have liability to commission salespeople as to workers compensation. unemployment insurance. minimum wage requirements. all of these.

workers compensation.

In real estate, the term "farming" refers to using one period to list and another period to sell in a never-ending cycle. working an area for buyers and sellers. advertising by season. delegating paperwork to others.

working an area for buyers and sellers. Or working an area for a type of property or buyer group.

In describing sales successes, it would NOT be advantageous to point out that listings with your firm have a 30% greater chance of being sold than the average for your local MLS. your firm sells 50% of its listings. the average time from listing to sale for your firm is 42 days less than the average sale in your MLS. your average sale is at 94.5% percent of list price while the average for your MLS is 87.3%.

your firm sells 50% of its listings. Since it indicates that you fail to sell 50 percent of your listings.


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