What Is a Quantitative Hypothesis?

The asset evaluation hypothesis refers to a reasonable inference based on objective normal conditions or development trends for certain things that are not accurately recognized during the asset evaluation process. The asset evaluation assumption is also a prerequisite for the conclusion of the asset evaluation.

Asset valuation assumptions

Right!

The asset evaluation hypothesis refers to a reasonable inference based on objective normal conditions or development trends for certain things that are not accurately recognized during the asset evaluation process. The asset evaluation assumption is also a prerequisite for the conclusion of the asset evaluation.

Types of

The following assumptions apply to asset valuation: ^[1]

1.Transaction assumptions

The trading assumption is the most basic premise for asset evaluation to be performed. It is assumed that all assets to be evaluated are already in the process of transaction. The appraiser will make valuations based on the simulated market conditions of the assets to be evaluated. In order to bring into play the role of expert judgment in providing the client with a reserve price of the asset transaction before the asset is actually traded, and at the same time to enable the asset assessment to be carried out, the transaction assumption is used to place the assessed asset in a "transaction". Very necessary.

The transaction hypothesis on the one hand creates the conditions for asset valuation to be carried out; on the other hand it clearly defines the external environment for asset valuation, that is, assets are placed in market transactions. Asset evaluation cannot be conducted in isolation from market conditions.

2.Open market assumptions

The open market hypothesis is a false statement or limitation on the market conditions to which the asset is intended to enter, and what kind of influence the asset will accept under such market conditions. The key to the open market assumption is to understand and grasp the essence and connotation of the open market. As far as asset valuation is concerned, the open market refers to fully developed and perfect market conditions, and it refers to a competitive market with voluntary buyers and sellers. In this market, the status of buyers and sellers is equal. Both have the opportunity and time to obtain sufficient market information, and the transaction behaviors of buyers and sellers are conducted under voluntary and rational rather than mandatory conditions.

The open market hypothesis aims to explain a fully competitive market condition, under which the exchange value of assets is constrained by market mechanisms and determined by market conditions, not by individual transactions.

The open market hypothesis is an important assumption in asset evaluation. All other assumptions are based on the open market hypothesis. The open market hypothesis is also a more frequently used hypothesis in asset evaluation. Any asset that can be traded on the open market, has a wide range of uses, or is highly versatile can be considered on the premise of the open market assumption.

3.Continuous use assumptions

The continuous use assumption is also a hypothetical description or explanation of the market conditions in which the asset is intended to enter, as well as the state of the asset under such market conditions. The assumption of continuous use is further subdivided into three specific situations: one is renewal in use; the other is renewal; and the third is relocation. Continuing use means that the assets under evaluation will continue to be used in accordance with their current uses and methods after changes in property rights or asset business occur. Reuse and reuse means that the asset being evaluated will change the current use of the asset after the change of property rights or the occurrence of asset business, and the new use will continue to be used. Relocation of relocation means that the assets to be evaluated will be changed to other space locations and used after the change of property rights or asset business.

4. Liquidation assumptions

The liquidation hypothesis is a hypothetical description of the conditions under which assets are forced to be sold or liquidated quickly under non-public market conditions. The liquidation assumption is based on the fact that the assessed asset is facing liquidation or has the potential to be liquidated, and then the estimated asset is estimated to be in a state of forced sale or rapid realization based on corresponding data.

Because the liquidation assumption assumes that the assessed asset is under forced sale or rapid realisation, the assessed value of the assessed asset is usually lower than that of the same asset under the assumption of the open market or the assumption of continued use. Therefore, the scope of application of asset evaluation results under the assumption of liquidation is very limited. Of course, the use of the liquidation assumption itself is also quite special.