Verified matched market levels are $450,000 exactly six months before the effective date and $460,000 at the effective date, with mix and terms controlled. Using a simple proportional monthly rate rather than compounding, what monthly percentage change results? Round to two decimals.
Correct Answer
C) 0.37 percent per month
Simple monthly percentage=[($460,000−$450,000)/$450,000]/6×100=0.37037%, rounded to 0.37%. This is the numerical result under the stated definitions, not an automatic market-condition or property-value conclusion. Common errors: dividing by the later level instead of the earlier one gives 0.36 percent per month; not dividing the total change by 6 months gives 2.22 percent per month; dividing by 12 months instead of 6 gives 0.19 percent per month.
Why This Is the Correct Answer
Option C is correct because the total change is $460,000 − $450,000 = $10,000, which is 2.222% of the earlier $450,000 level. Dividing that simple total by the 6 months gives 0.37037% per month, which rounds to 0.37 percent per month.
Why the Other Options Are Wrong
Option A: 0.19 percent per month
Option A, 0.19 percent per month, divides the total change by 12 months instead of 6: ($10,000 / $450,000) / 12 × 100 = 0.185, rounded to 0.19. The interval is six months, so the correct figure is ($10,000 / $450,000) / 6 × 100 = 0.37%.
Option B: 0.36 percent per month
Option B, 0.36 percent per month, uses the later $460,000 level as the base: ($10,000 / $460,000) / 6 × 100 = 0.36. A change is measured from the starting level, so the correct calculation is ($10,000 / $450,000) / 6 × 100 = 0.37%.
Option D: 2.22 percent per month
Option D, 2.22 percent per month, is the total six-month change ($10,000 / $450,000 × 100 = 2.22%) reported as if it were monthly. Dividing that total by 6 months gives the correct 0.37% per month.
Old base, then split months
First divide the change by the old (earlier) level, then split the total evenly across the months in the interval.
How to use: Use this two-step order whenever a question asks for a simple monthly rate between two dated price levels.
Exam Tip
Check the base and the month count before you calculate; distractors are often built from using the later level, the wrong number of months, or skipping the division by months.
Common Mistakes to Avoid
- -Dividing the dollar change by the later level instead of the earlier one
- -Reporting the full six-month change as a monthly rate
- -Dividing by 12 months when the interval is 6 months
Concept Deep Dive
Analysis
This question tests converting a total change between two matched market levels into a simple monthly rate. The total change is measured against the earlier (base) level and then spread evenly over the six months, with no compounding. Getting the base, the number of months and the percentage conversion right is what separates the answer from the distractors.
Background Knowledge
Market-conditions (time) adjustments rest on evidence of how price levels changed between a comparable's sale date and the effective date, ideally from matched or controlled data. A simple (non-compounded) rate spreads the total percentage change evenly over the period, much as simple interest is earned only on the original principal. The resulting rate is a numerical result, not by itself a conclusion about value.
Real-World Application
An appraiser has paired resales showing a controlled market level rising from $450,000 to $460,000 over six months. To time-adjust a comparable that sold three months ago, the appraiser converts the change to a simple monthly rate of about 0.37% and applies it to the elapsed months, documenting the supporting evidence.
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