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REITs securitize illiquid real estate assets; their shares are listed
on stock exchanges and over the counter. REITs permit smaller investors
to gain real estate exposure. Exchange-traded funds, mutual funds, and
traded closed-end investment companies allow investors to obtain a
professionally managed diversified portfolio of real estate securities
with a relatively small outlay.
Own and manage such properties as office buildings, apartment
buildings, and shopping centers. Shareholders receive rental income and
income from capital appreciation if the property is sold for a gain.
Real estate values are affected by IDIOSYNCRATIC VARIABLES, such as
location. There appear to be strong CONTINENT-SPECIFIC factors in real
estate returns for Europe and NORTH AMERICA. The implication is that
COMPLETE DIVERSIFICATION in real estate can be achieved only by
INVESTING INTERNATIONALLY. Nearly optimal diversification can be
achieved by targeting one country from each continent.
When NAREIT and NCREIF indices are used as benchmarks for real estate
investments or in asset allocation studies, the problems associated with
the construction of the indices mentioned previously must be taken into
account. Importantly for performance appraisal, the NCREIF Index is NOT
AN INVESTABLE INDEX.
DIRECT ownership includes investment in RESIDENCES, BUSINESS (commercial) REAL ESTATE, and AGRICULTURAL LAND.
Operate by buying real estate and by acquiring mortgages on both COMMERCIAL and RESIDENTIAL real estate.
At the beginning of the 21st century, INDIVIDUAL and INSTITUTIONAL
investors continue to focus on the POTENTIAL RETURN enhancement and
RISK-DIVERSIFICATION benefits of real estate investments in a portfolio
of STOCKS, BONDS, and frequently, other alternative investments.
Investigators have come to MIXED conclusions on the INFLATION-HEDGING
CAPABILITIES of real estate investment. • Bond and Seiler found that US
residential RE provided a significant inflation hedge in the 69-94 •
Hoesli et al. found that UK RE provided a better short-term inflation
hedge than bonds but a worse hedge than stocks. • Stevenson and Murray
did not find evidence that Irish RE provided a significant inflation
hedge.• Liu et al. found that RE provided a worse hedge than stocks in
some countries but a
The benefit of real estate investment internationally has been
researched. Overall, the evidence indicates that investors may benefit
from including domestic and nondomestic investments in real estate in
their portfolios.
Private company—or a consortium of private companies—designs,
finances, and builds the new project (e.g., a road or hospital) for
public use. - consortium maintains the physical infra over a period that
often ranges from 25 to 30 years. - The public sector leases the infra
and pays the consortium an annual fee for the use of the completed
project over the contracted period. (avoids the need to issue debt or
raise taxes to finance infrastructure development) - The public sector
staffs the infra & ensures saf
• Companies engaged in real estate ownership, development, or
management, such as homebuilders and real estate operating companies •
(REITS), which are publicly traded equities representing pools of money
invested in real estate properties and/or real estate debt; • COMMINGLED
REAL ESTATE FUNDS (CREFS), which are professionally managed vehicles
for substantial commingled (i.e., pooled) investment in real estate
properties; • Separately managed accounts, which are often offered by
the same real estate adviso
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