Question: In Problem, how much did the accuracy of your estimate of market value improve as a result of the addition of the fourth empirical valuation observation (i.e., what is your estimation error with the fourth transaction, and what is it with only the first three)?
Problem: Three nearly identical properties are all sold as of the same date, for prices of $2,650,000, $2,450,000, and $2,400,000.
a. What is your best estimate of the market values of each of two other properties that are virtually identical to the first three, as of that same date?
b. If one of those additional properties actually did sell for a price of $2,550,000, what is your estimate of the market value of the fifth property as of that same date?
c. What is the market value of the fourth property?
d. What is your best estimate of the error or noise (defined as the difference between the transaction price and the market value) in the observed transaction prices of all four properties?