A weighted mean differs from a simple mean in that the weighted mean:
Correct Answer
B) Gives more influence to observations judged more reliable
Why this is correct: A weighted mean assigns different weights (importance) to each data point based on judgment, such as giving more influence to sales that are more comparable or reliable. A simple (arithmetic) mean gives equal weight to every observation. Why the other choices are wrong: "Always produces a higher value than a simple arithmetic mean" is wrong; weighting can produce a higher or lower value depending on the weights assigned. "Uses only the highest and lowest observations" describes the midrange, not a weighted mean. "Requires that the sample be normally distributed" is not a requirement for calculating a weighted mean. Exam tip: Weighting is a formal way to reconcile comparables; the weights must be supported by your analysis.
Why This Is the Correct Answer
Why this is correct: A weighted mean assigns different weights (importance) to each data point based on judgment, such as giving more influence to sales that are more comparable or reliable. A simple (arithmetic) mean gives equal weight to every observation. Why the other choices are wrong: "Always produces a higher value than a simple arithmetic mean" is wrong; weighting can produce a higher or lower value depending on the weights assigned. "Uses only the highest and lowest observations" describes the midrange, not a weighted mean. "Requires that the sample be normally distributed" is not a requirement for calculating a weighted mean. Exam tip: Weighting is a formal way to reconcile comparables; the weights must be supported by your analysis.
More appraisal-statistical-methods Questions
A price index rises from 100 to 121 over two years. What compound annual rate does this represent?
A sample of four sales drawn from a market with 200 annual transactions is:
A set of comparable sales has a mean of $250,000 and a standard deviation of $20,000. What is the coefficient of variation?
A property sold for $400,000 and resold three years later for $463,050 with no physical change. What compound annual rate does this indicate?
An appraiser includes both 'total room count' and 'bedroom count' as independent variables in a regression model estimating single-family home sale prices. The variance inflation factor (VIF) for 'bedroom count' is calculated as 12.3. What is the most appropriate appraisal action based on this result?
An appraiser runs a regression of sale price on GLA, age, and a binary variable for 'renovated' (1 = yes, 0 = no). The estimated coefficient for 'renovated' is $18,400 with a standard error of $6,200 and a t-statistic of 2.97. Assuming a two-tailed test at Ξ± = 0.05 and 42 degrees of freedom, what conclusion is supported regarding the market's recognition of renovations?
To validate the functional form of a regression model used for adjustments, an appraiser plots residuals against predicted values and observes a clear inverted-U pattern. What does this pattern indicate, and what is the most defensible corrective action?
A histogram of neighborhood sale prices shows two distinct peaks. What does this most likely mean?
What does it mean to validate a regression model?
An appraiser includes months elapsed since each sale as a variable in a price model. What is this intended to capture?
People Also Study
Valuation Principles & Procedures
25% of exam
Property Description & Analysis
20% of exam
Market Analysis & Highest/Best Use
15% of exam
Appraisal Math & Statistics
15% of exam
USPAP (Ethics & Standards)
15% of exam
Previous Question
An appraiser selects the comparables that best match the subject rather than drawing sales at random. What follows?
Next Question
To validate the functional form of a regression model used for adjustments, an appraiser plots residuals against predicted values and observes a clear inverted-U pattern. What does this pattern indicate, and what is the most defensible corrective action?