CFE Statistical Analysis & Mass Appraisal 1 — Questions and Answers
Question 1: In mass appraisal, which statistical measure is used to indicate the central tendency of a ratio study?
- Standard deviation
- Median assessment ratio (Correct answer)
- Coefficient of variation
- Price-related differential
Correct answer: Median assessment ratio
The median assessment ratio is the primary measure of central tendency used in ratio studies to evaluate assessment level accuracy.
Question 2: The Coefficient of Dispersion (COD) in a ratio study measures:
- The bias between high-value and low-value properties
- The average absolute deviation from the median ratio (Correct answer)
- The correlation between sale price and assessed value
- The percentage of properties within 10% of the median
Correct answer: The average absolute deviation from the median ratio
The COD measures the average absolute deviation of individual assessment ratios from the median ratio, indicating uniformity of assessments.
Question 3: According to IAAO standards, an acceptable COD for residential properties in a typical market is:
- 5% or less
- 10% or less (Correct answer)
- 15% or less
- 20% or less
Correct answer: 10% or less
IAAO standards specify a COD of 10% or less for residential properties in typical, homogeneous markets to indicate acceptable uniformity.
Question 4: The Price-Related Differential (PRD) is used primarily to detect:
- Seasonal trends in the market
- Vertical inequity between high- and low-value properties (Correct answer)
- The accuracy of cost data in the cost approach
- Geographic clustering of sales ratios
Correct answer: Vertical inequity between high- and low-value properties
The PRD identifies vertical inequity, revealing whether high-value or low-value properties are systematically over- or under-assessed relative to each other.
Question 5: In multiple regression analysis (MRA) used for mass appraisal, the dependent variable is typically:
- Square footage of living area
- Sale price or assessed value (Correct answer)
- Year of construction
- Neighborhood code
Correct answer: Sale price or assessed value
In MRA for appraisal purposes, the dependent variable is the sale price or assessed value that the model is trying to predict.
Question 6: A sales ratio study compares:
- Assessed values to appraised values
- Assessed values to market sale prices (Correct answer)
- Land values to improvement values
- Current assessments to prior year assessments
Correct answer: Assessed values to market sale prices
A sales ratio study computes the ratio of assessed value to the verified sale price for arms-length transactions to evaluate assessment accuracy.
Question 7: Which type of regression model assumes that the relationship between property characteristics and value is multiplicative rather than additive?
- Linear regression model
- Additive regression model
- Nonlinear or log-linear model (Correct answer)
- Stepwise regression model
Correct answer: Nonlinear or log-linear model
Log-linear (or multiplicative) regression models assume that the effects of property characteristics multiply together, which often better reflects actual property value behavior.
CFE Statistical Analysis & Mass Appraisal 1
In mass appraisal, which statistical measure is used to indicate the central tendency of a ratio study?