Explain why an investor that is held to making regular payouts (like a pension fund, insurance...

Explain why an investor that is held to making regular payouts (like a pension fund, insurance company or endowment) might be drawn more to real estate than any of the other alternative investments listed in the course.

Solutions

Expert Solution

Real Estate is one of the safest investment one can make. It is very rare that the value of real estate goes down. Also there is a natural appreciation in value of real estate because the population is constantly increasing and people need home to live in and offices to carry on their business.

Real Estate fits well with a Pension funds' long term investment plan and it delivers stable cash flows to the portfolio. Investments in Appartments provide a stable rent income. Also these funds always tend to invest in high value sustainable real Estate providing long term benefits.

The other options such as Equity and Fixed income group investments have their drawbacks. Investments in equity is more risky than real estate in the long term. Fixed income group investments are less risky, but the returns are also low.

Thus an investor that is held to making regular payouts might be drawn more to real estate than any of the other alternative investments.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

The trustees of a pension fund would like to examine the issue of protecting the bonds...

The trustees of a pension fund would like to examine the issue of protecting the bonds in the fund’s portfolio against an increase in interest rates using options and futures. Before discussing this with their external bond fund manager, they decide to ask four consultants about their recommendations as to what should be done at this time. It turns out that each of them has a different recommendation. Consultant A suggests selling covered calls, Consultant B suggests doing nothing at...

Explain why hedging is like buying an insurance policy. To buy an insurance policy, you need...

Explain why hedging is like buying an insurance policy. To buy an insurance policy, you need to pay a premium; what is the corresponding premium in hedging? Give an example to clarify your answer.

Fund life & health insurance Explain carefully why this statement is false Since the level of...

Fund life & health insurance Explain carefully why this statement is false Since the level of insurer’s capital reflects its financial stability, companies with the highest absolute value of capital is always preferred.

Fund life & health insurance Explain carefully why this sentence is false The judgment method is...

Fund life & health insurance Explain carefully why this sentence is false The judgment method is a preferred method when multiple factors (sometimes conflicting) factors are involved.

Why would Category 1 assets be used to fund a pension plan?

Explain: a. In what way can a smart money investor be like an angel investor? b....

Explain: a. In what way can a smart money investor be like an angel investor? b. What is the Capital Gap that exists in the financing timeline and why is it a challenge? What can we do to help solve this problem? Explain

Fund life & health insurance Explain carefully why this statement is false The “net rate” takes...

Fund life & health insurance Explain carefully why this statement is false The “net rate” takes into consideration of the probability of the insured event happening during the term of the insurance, and the expenses insured by the insurer in maintaining the policy.

Question