Chapter 12: Bonds, equity and property

Question 2

Running (flat) yield

Answer 2

yield generated by the payment of coupons alone

Question 3

Redemtpion yield

Answer 3

Obtained by the investor who holds the bond to maturity

Question 4

Difference between property and equities

Answer 4

• Property rents are generally fixed for a number of years at a time
• Property contracts may be for a fixed term and then go back to the owner

Question 5

Similarities between property and equity

Answer 5

• Both require assumptions about future income
• Income is related to inflation for both
• Use deterministic approach to value