DCA Appraisal Methods & Valuation 3 — Questions and Answers
Question 1: The Rapaport Price List is a key tool in diamond valuation. What does it primarily report?
- Retail consumer prices for polished diamonds
- Wholesale asking prices for round brilliant diamonds by size and quality (Correct answer)
- Auction realized prices for investment-grade diamonds
- Manufacturing costs for diamond cutters
Correct answer: Wholesale asking prices for round brilliant diamonds by size and quality
The Rapaport Price List reports wholesale asking prices for polished round brilliant diamonds organized by carat weight, color, and clarity.
Question 2: When valuing a fancy-colored diamond, why is the Rapaport Price List less directly applicable?
- It only covers diamonds over 1 carat
- Fancy-colored diamonds trade on unique attributes that standard price grids cannot capture (Correct answer)
- It does not list color grades below J
- Fancy colors are appraised only by auction houses
Correct answer: Fancy-colored diamonds trade on unique attributes that standard price grids cannot capture
Fancy-colored diamond prices depend on hue, saturation, distribution, and rarity factors not captured by a standard colorless diamond price grid.
Question 3: A 'discount to Rapaport' percentage is commonly used in diamond trading. What does a 30% discount mean?
- The diamond sells at 30% above list price
- The diamond sells at 70% of the Rapaport listed asking price (Correct answer)
- The buyer receives a 30% rebate after purchase
- The diamond failed quality grading by 30%
Correct answer: The diamond sells at 70% of the Rapaport listed asking price
A 30% discount to Rapaport means the transaction price is 70% of the published Rapaport list price.
Question 4: Which characteristic of a diamond would typically result in a LARGER discount to Rapaport (lower relative price)?
- Excellent cut with strong fluorescence in a D color stone
- Poor proportions with visible inclusion clusters (Correct answer)
- A well-cut H VS2 with faint fluorescence
- An ideal-cut 1.00 ct D Flawless
Correct answer: Poor proportions with visible inclusion clusters
Poor proportions and visible inclusion clusters reduce marketability and command larger discounts from standard Rapaport prices.
Question 5: For appraisal purposes, 'liquidation value' is best described as:
- The price achievable in a forced or time-constrained sale (Correct answer)
- The average secondary market price over 12 months
- The wholesale replacement cost to a jeweler
- The insurance declared value less depreciation
Correct answer: The price achievable in a forced or time-constrained sale
Liquidation value reflects the price achievable under forced or time-constrained conditions, typically well below fair market value.
Question 6: A diamond appraiser documents 'provenance' in a valuation report. Provenance primarily refers to:
- The cut quality and light performance of the diamond
- The documented history of ownership and origin of the stone (Correct answer)
- The clarity plotting diagram from the grading lab
- The fluorescence strength under UV light
Correct answer: The documented history of ownership and origin of the stone
Provenance is the documented ownership history and origin of a diamond, which can significantly affect its value and marketability.
Question 7: Which appraisal document element is required to make an appraisal legally defensible for insurance purposes?
- The appraiser's personal opinion of beauty
- A complete description including measurements, weight, and quality grades with the appraiser's credentials (Correct answer)
- A photograph taken by the client
- A verbal confirmation from the selling retailer
Correct answer: A complete description including measurements, weight, and quality grades with the appraiser's credentials
A legally defensible insurance appraisal must include full gem description, measurements, quality grades, current value, and the appraiser's credentials and signature.
DCA Appraisal Methods & Valuation 3
The Rapaport Price List is a key tool in diamond valuation.
What does it primarily report?