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Divides additive and total genetic variance by phenotypic variance to give narrow-sense and broad-sense heritability.
Heritability
Narrow sense h2 = VA / VP; broad sense H2 = VG / VP; the remainder is environmental variance
Only additive variance is reliably transmitted to offspring, so it predicts the response to selection.
No. Heritability describes variance within one population and environment, not the potential for environmental change.