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Economic Value Determinants of REITs by Sector

REIT Primary Driver Secondary Driver
Retail Retail Sales Growth Job Creation
Office Job Creation New Space Supply VS Demand
Residential Population Growth Job Creation
Health Care Population Growth New Space Supply VS Demand
Industrial Retail Sales Growth Population Growth
Hotel Job Creation New Space Supply VS Demand
Storage Population Growth Job Creation

A LIFO Liquidation occurs when…

…the number of units sold is greater than the number of units bought or manufactured causing a portion of old inventory to be liquidated (sold).

The Neoclassical model assumes…

All countries have access to the same technology and as a result per capita income eventually should grow at the same rate everywhere.

If the recommendation rating category is relative…

A benchmark index or objective must be clearly indicated to comply with the research objectivity standards.

Bond covenants can…

…create an incentive to engage in earnings manipulation.

Systematic risk is high for…

…high beta funds.

To test whether two variables are cointegrated…

…we regress one data series on the other and examine the residuals for a unit root using the Dickey-Fuller/Engle-Granger test.

If we reject the null hypothesis, the error terms of the two data series are covariance stationary and cointegrated.

The alpha and information ratio for a portfolio of only cash and the benchmark portfolio is:


Because the manager is taking no active risk and generating no return beyond the benchmark.

Carve Out VS Spinoff VS Splitoff

Carve Out: Creation of a new legal entity with shares being sold for cash to the market.

SpintOff: Shares are issued to existing shareholder so there are now two separate companies.

SplitOff: Shareholders have the option to exchange shares for shares in a newly created company.

Changes in market value are ignored under…

…the equity method.


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