Question

For a given set of underlying real estate properties, the type of real estate index that is most likely to have the lowest standard deviation is a(n): A) repeat sales index. B) appraisal index. C) REIT trading price index.

Answer 1

Answer:

The answer is Letter B, appraisal index

Explanation:

Because appraisal index returns are based on estimates of property values.  Estimating values tends to introduce smoothing into returns data, appraisal index returns are likely to have lower standard deviations than index returns based on repeat sales, trading prices or REIT trading price.