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The motivation for investing includes: the simplicity of the underlying investment and a desire for: 1) An investment secured by real estate 2) Regular income derived from monthly dividend distributions; 3) Higher yields than those available from investing in money market funds or bonds; 4) An Active involvement in real estate finance.
In order to compare REITs with bonds, take a look at the breakdown of these two asset types: REITs Equity investment in a wide-ranging portfolio of properties or mortgages Dividends pay qu.
REITs were created in the United States after President Dwight D. Eisenhower signed Public Law 86-779, sometimes called the Cigar Excise Tax Extension of 1960. [12] [13] The law was enacted to allow all investors to invest in large-scale, diversified portfolios of income-producing real estate in the same way they typically invest in other asset classes – through the purchase and sale of ...
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The mechanics of the strategy are to purchase a fixed-income security and resell it at a higher price. The strategy is used when there are signs of mispricing of fixed-income securities in the market, whereby, for example, fixed-income arbitrage funds will take a short or long position on the security to benefit when the price is later ...
For example, interest income from U.S. Treasurys is exempt from state and local income taxes, and earnings from municipal bonds are not subject to federal taxes. Cons 1.
Changes in term structure form one of the most important sources of risk in a portfolio. Unlike an equity price, which just moves one-dimensionally, the price of a fixed-income security is calculated from sum of discounted cash flows, where the discount rate used depends on the interest rate at that maturity. The magnitude and shape of curve ...
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