CFA Practice Question
A valuation expert has been retained to value a piece of specialized real estate on the outskirts of a small town. He does not have any knowledge of sales of similar properties in the same neighborhood and time-frame. His best bet is to follow all of these approaches EXCEPT
A. The hedonic approach
B. The discounted cash flow approach
C. The net operating income approach or cost approach
Explanation: Hedonic approach is based on the sales comparison method and requires knowledge of comparable transactions.
User Contributed Comments 3
| User | Comment |
|---|---|
| Dinosaur | what is the cost approach? |
| jackwez | if you reconstruct the house |
| petervinh18 | In real estate industry...Cost approach is how much to build the house or repairing...Like jackwez mentioned. |