Professor Proposses

Case Synopsis

The professor was ready to propose to his girlfriend and decided to spend between Cdn$2,000 to Cdn$4,000 on a diamond ring. Never having purchased a diamond before, the professor learned there are characteristics, qualities, configurations and pricing in determining a diamond’s value. The professor decided to compare information from internet wholesalers with the quote he received from the mall to determine the value of the diamond he found.

State the Assignment Question

Is the diamond found in the mall a reasonable value after being compared to the downloaded data from the wholesalers?

Case Analysis

In determining a diamonds value, the characteristics most noted are the cut, clarity, carat weight and color. These characteristics are known as the 4 C’s. Polish and symmetry as well as lab certification are also taken into consideration when evaluating a diamonds worth. The professor had all the above information from the mall diamond in which he received a quote as well as the data from three diamond wholesalers. This data needed to be complied to determine if the mall quoted diamond price if $3,100 was reasonable.

In analyzing the diamond data, the following was first taken into consideration. The professor had never purchased a diamond before and therefore had little knowledge of diamonds. The mall diamond had a .98 carat weight with a good cut, color was J or faint yellow, clarity was SI2 meaning it had very few inclusions and was priced at $3,100. The wholesaler diamonds ranged in price from $160 to $3,145 and the data the professor downloaded included the 4C’s (cut, clarity, carat, color) for the diamonds. The professor intends to spend between $2,000 and $4,000 on the diamond he chooses with the best qualities.

The first interpretation of the data was a scatter plot from the diamond prices of three wholesalers. This aided in determining how closely the priced the diamonds were based on carat weight and also helped to determine if the...