Chapter 12 Behaviour of the markets

Question 1

The main factors affecting bond yields - SPROEITI

Answer 1

Short term interest rates
Public sector borrowing: the fiscal deficit
Returns on alternative investments, both domestic and overseas.
Other economic factors (BOP, C, Tax) 
Economic growth
Inflation
The exchange rate
Institutional cashflows

Question 2

The influences of the level of property in the market -

ODI

Answer 2

Occupation market
Development cycles
Investment market

Question 3

Investors preferences are influenced by- FUME CC

Answer 3

Fashion or sentiment altering, sometimes for no real
Uncertainty in political climate
Marketing
Education of investing undertaken by the suppliers of a particular asset class
Change in their liabilities
Change in the regulatory or tax regimes

Question 4

Factors affecting the level of the equity market - ERICA IE POTaR

Answer 4

Equity Risk premium - Investor preception
Real interest rates
Inflation
Currency
Alternative investments

Institutional cashflows
Economic growth

Political climate
Overseas equity markets
Taxation
Regulation

Question 5

Factors affecting the risk of property investment

U VOLD/ PUTI VOLDI

Answer 5

Uniqueness
Void periods
Obsolescence
Liquidity/marketability 
Dealing costs/Insurance costs
/

Political risk
Uniqueness
Tenant default
Indivisibility of units
Void periods
Obsolescence
Liquidity/Marketability 
Dealing costs/ Depreciation
Insurance costs