Chapter 10 - Equity And Property Markets Flashcards
1
Q
Equities
A
Ordinary share is share in ownership
2
Q
Investment and risk characteristics of equities
A
Security depends on profitability Long term real yield Higher expected returns than bonds Income and capital value can be volatile Held in perpetuity Dealing expenses linked to marketability Marketability depends on size of company
3
Q
Quoted shares
A
More marketable
More secure
Easier to value
4
Q
Why use industry groupings to categories shares
A
Practical
Correlated
5
Q
Why use industry groupings to categories shares
Specialise in one are
A
Factors affecting one company affects other
Info from common source
Can’t be expert in all areas
Structure to decision making process
6
Q
Why use industry groupings to categories shares
Share prices correlated because
A
Same resources
Same markets
Similar financial structures
7
Q
Property
A
Location Age and condition Quality of tenant Number of comparable properties Lease structure Size
8
Q
Investment and risk characteristics of property
A
Void and default risk Obsolescence Susceptible to political risk Long term real returns Higher returns than bonds Stepped income stream Running yield varies with type of property High utility to investor Long term volatility of capital values, short term stability High dealing and management costs Investment Characteristics changed by investor Unmarketable Large unit size Indivisibility Uniqueness Subjective valuations
9
Q
Indirect property investments
A
Pooled property funds
Property share companies
