CFA® Level I question of the day
11 October 2026 · Alternative Investments
The three approaches produce very different values for one property. What is that telling you?
Show the answer and explanation
Answer: B. Something real about the property or its market
A large gap between the income and replacement cost approaches points to obsolescence or to a distorted rental market. The spread between the methods is itself informative, which is why all three are run rather than one.
- A. That one of the three has been computed incorrectly — Possible, and a large gap more often reflects something genuine about the asset or its market.
- C. That the property cannot be valued — The disagreement is itself information; it points to where the property's economics depart from the norm.
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Notes, formulas and a worked question for every learning outcome are on the Alternative Investments page, with the whole CFA Level I syllabus alongside.