What is meant by model drift?
Correct Answer
C) A model losing accuracy as the market changes
Why this is correct: Model drift refers to a valuation model losing predictive accuracy over time because market relationships embedded in its training data change. This degradation occurs as buyer preferences, economic conditions, or supply-demand dynamics shift. Why the other choices are wrong: "A model returning different values on each run" describes randomness or instability, not drift. "A model being applied outside its licensed region" is a scope issue. "A model whose vendor has ceased supporting it" relates to maintenance, not accuracy decay. Exam tip: Model drift is why periodic testing against current market data is essential for automated valuation models.
Why This Is the Correct Answer
Why this is correct: Model drift refers to a valuation model losing predictive accuracy over time because market relationships embedded in its training data change. This degradation occurs as buyer preferences, economic conditions, or supply-demand dynamics shift. Why the other choices are wrong: "A model returning different values on each run" describes randomness or instability, not drift. "A model being applied outside its licensed region" is a scope issue. "A model whose vendor has ceased supporting it" relates to maintenance, not accuracy decay. Exam tip: Model drift is why periodic testing against current market data is essential for automated valuation models.
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