GIA Appraisal Methods & Valuation 2

Question 1

Which appraisal approach is most commonly used for valuing diamonds intended for insurance replacement purposes?

Accepted Answer

Retail replacement value approach

Answer

Insurance appraisals use retail replacement value, reflecting the cost to replace the item with one of like kind and quality at retail.

Question 2

A diamond appraisal conducted for estate tax purposes should reflect which value?

Accepted Answer

Fair market value

Answer

Estate tax appraisals require fair market value—the price a willing buyer would pay a willing seller with no compulsion to transact.

Question 3

The 'Rapaport Price List' is primarily used in the diamond industry as:

Accepted Answer

A wholesale benchmark for polished diamonds

Answer

The Rapaport Price List serves as a widely used wholesale benchmark expressing prices per carat for polished diamonds by shape, size, color, and clarity.

Question 4

When calculating the per-carat value of a 2.50 ct diamond listed at $8,000 per carat, what is the total value?

Accepted Answer

$20,000

Answer

Total value = weight × per-carat price = 2.50 ct × $8,000/ct = $20,000.

Question 5

Which factor causes the 'size premium' effect in diamond pricing?

Accepted Answer

Larger diamonds are rarer and command exponentially higher per-carat prices

Answer

Larger gem-quality diamonds are exponentially rarer in nature, so per-carat prices increase non-linearly with size.

(GIA) Certified Diamonds Gemological Institute of America Practice Test

(GIA) Certified Diamonds Gemological Institute of America Practice Test

GIA Appraisal Methods & Valuation 2