A REIT purchases property and holds these assets within a trust●Investors gain access to a diversified portfolio●Types of properties that may be held in REITs include industrial, hoteland leisure, retail and office●Investors may benefit from both capital gains on the property assetsplus rental income generated by the properties●Units in an REIT are much more liquid than the underlying property○Easier to sell units than to sell property held in the trustInfrastructure Funds●Managed fund that provides investors with the opportunity to invest ininfrastructure assets such as toll roads and utilities●Infrastructure projects are normally multi-million dollar projects andtherefore beyond the investment capacity of the average investor●Infrastructure funds pools funds together to invest in these types ofprojects●Returns to investors may take the form of capital gains and incomegenerated from the project (e.g. toll roads generate income from tolls)●Income earnings from infrastructure assets are quite predictable asthey are often regulated or guaranteed by government○These types of projects typically also have high barriers to entry- therefore low competitionInsideSherpa
FINS1612Options●Gives the buyer the right, but not the obligation to buy (call option) orsell (put option) a commodity or security at a predetermined exerciseprice; the option buyer pays a premium to the option writer●The exercise price is the price specified in an options contract atwhich the option buyer can buy or sell●Note that there is no obligation to proceed with the transaction if pricemovements in the market are not favourable (cost to the buyer is justthe initial premium)Warrants●A financial instrument that conveys a right in the form of an option●This is another derivative product●A warrant issuer is a third party that is authorised by a stockexchange to write warrant contracts●Warrant issuers are required to make a market (must quote both buyand sell prices on their warrant series)●A call warrant holder will benefit from an upwards price movementwhilst a put holder benefits from a downward movement●An equity-based call warrant gives the warrant holder the right to buythe underlying security at a particular price (warrant also gives theright to sell)●Instalment warrants give the warrant holder the right to buy theunderlying shares by payment of periodic instalments, but still beentitled to receive any dividend payments and franking creditsFutures Contract●An exchange-traded agreement to buy or sell a specific commodity orfinancial instrument at a specific price at a predetermined future dateInsideSherpa
FINS1612The Interest Rate Market Role of a Stock Exchange●Another lesser function of a stock exchange is the listing of some ofthe debt issues of corporations, financial institutions and government○The listing, quotation and trading of typically longer term
Upload your study docs or become a
Course Hero member to access this document
Upload your study docs or become a
Course Hero member to access this document
End of preview. Want to read all 252 pages?
Upload your study docs or become a
Course Hero member to access this document
Term
Three
Professor
nice
Tags
Basel II, Capital requirement
