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Executive Summary
The professor decided to propose to his girlfriend and purchase a diamond engagement ring at the mall that's cost was within his budget of Cdn$2,000 - Cdn$4,000. At the mall he realized that there were several characteristics that determined a diamond's value. The most noteworthy diamond characteristics are color, cut, carat and clarity (the four C's). Other characteristics include polish, symmetry and certification. He liked a particular diamond quoted at $3,100 that had a carat weight of 0.9, a very good cut, J color, S12 clarity, good polish, very good symmetry and a GIA certification. The professor did some research to compare his quote with pricing from three online diamond wholesalers he found.
To determine whether or not the professor received a fair price, our team compiled all of the three wholesalers' prices to create a market price and eliminated what we considered were outliers (diamonds priced at $665.00
or less). We ran a multiple regression model with various scatter plots and concluded that the price the professor was quoted was fair and was actually $98 or 3.1% less than the quoted price of $3,100.
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Background
The professor, with intentions to propose to his girlfriend, went to the mall searching for a diamond engagement ring that suited his wife-to-be's taste and was within his budget range of Cdn$2,000 - Cdn$4,000. He found there was much more to buying a diamond engagement ring than meet the eye. The professor quickly realized that buying a diamond engagement ring required a deeper understanding of what he was looking for and what was available within his price range. He learned color, clarity, cut, certification, polish, symmetry, and carat were important characteristics to look for when making a diamond purchase. In the mall...