Question

Greater uncertainty about property loss, the standard deviation of loss, often lowers value of property, all else equal.

a)True
b)False

Answer 1

Greater uncertainty about property loss, as indicated by a higher standard deviation of loss, can lower the value of property, all else equal.

Step-by-step explanation:

Greater uncertainty about property loss, as indicated by a higher standard deviation of loss, can lower the value of property, all else equal. This is because higher uncertainty means that there is a higher risk of experiencing larger losses, which makes the property less desirable to potential buyers or investors.

For example, let's say there are three investment options with different standard deviations of loss: investment A with a standard deviation of $200,000, investment B with a standard deviation of $600,000, and investment C with a standard deviation of $400,000. All else equal, investment B will be considered less valuable than investment A and C because it has a higher standard deviation of loss, indicating greater uncertainty.

Therefore, the statement 'Greater uncertainty about property loss, the standard deviation of loss, often lowers the value of property, all else equal' is true.