Why should an appraiser state the source of the data used in a statistical analysis?
Correct Answer
C) The reader must be able to judge its reliability
Why this is correct: The Uniform Standards of Professional Appraisal Practice (USPAP) emphasizes transparency and credibility. Stating data sources allows the reader to assess the reliability and appropriateness of the data used, which is fundamental to judging the soundness of the analysis and conclusion. Why the other choices are wrong: 'Sources determine which formula must be applied' is incorrect because the choice of analytical method depends on the appraisal problem, not the data source. 'USPAP requires a bibliography in every report' is wrong; USPAP requires disclosure of data sources relevant to the analysis, not a formal bibliography in every instance. 'Naming sources shifts responsibility to the provider' is false; the appraiser remains responsible for the selection and use of all data in the report. Exam tip: Always disclose your data sources. This supports your report's credibility and allows users to assess the reliability of your work.
Why This Is the Correct Answer
Why this is correct: The Uniform Standards of Professional Appraisal Practice (USPAP) emphasizes transparency and credibility. Stating data sources allows the reader to assess the reliability and appropriateness of the data used, which is fundamental to judging the soundness of the analysis and conclusion. Why the other choices are wrong: 'Sources determine which formula must be applied' is incorrect because the choice of analytical method depends on the appraisal problem, not the data source. 'USPAP requires a bibliography in every report' is wrong; USPAP requires disclosure of data sources relevant to the analysis, not a formal bibliography in every instance. 'Naming sources shifts responsibility to the provider' is false; the appraiser remains responsible for the selection and use of all data in the report. Exam tip: Always disclose your data sources. This supports your report's credibility and allows users to assess the reliability of your work.
More appraisal-statistical-methods Questions
A price index rises from 100 to 121 over two years. What compound annual rate does this represent?
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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?
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