A residual in a regression analysis is:
Correct Answer
C) The difference between the actual and predicted price
Why this is correct: In regression, a residual for a given data point is the difference between the actual observed value of the dependent variable (e.g., actual sale price) and the value predicted by the model. Residuals are used to check model accuracy. Why the other choices are wrong: It is not the excluded portion of the sample. It is not land value (that's the residual technique in cost approach). It is not income after expenses (that's net operating income). Exam tip: Plot residuals. A random scatter suggests a good model; a pattern suggests a problem.
Why This Is the Correct Answer
Why this is correct: In regression, a residual for a given data point is the difference between the actual observed value of the dependent variable (e.g., actual sale price) and the value predicted by the model. Residuals are used to check model accuracy. Why the other choices are wrong: It is not the excluded portion of the sample. It is not land value (that's the residual technique in cost approach). It is not income after expenses (that's net operating income). Exam tip: Plot residuals. A random scatter suggests a good model; a pattern suggests a problem.
More appraisal-statistical-methods Questions
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