There has been research carried out on the risk and returns of real estate investments trusts (REIT). This study was done by Najand and Fitzgerald (2006, p.174) who studied the volatility and return for REITs between 1995 and 2003 with daily data where they found that they had an average beta of 0.24 and an abnormal return 2.25%. A study done by Chaudhry, Myer and Webb (1999, p.342) on real estate stocks, in the United States between the period 1978 and 1996, revealed that common stocks had an inverse long-run relationship with real estate stocks. This study can be compared to other results concluded from the studies on common stock. Another study done by Ennis and Burik (1991, p.24) between the years 1980 and 1989 on U.S real estate stocks deduced that real estate stocks generally have a low correlation or beta to market index and that it can be both positive and negative. Nevertheless, there are no accessible research which is very new or recent about the movements of real estate stocks and their performance when compared to the market especially when it comes to the real estate markets in china. The housing prices in the Chinese real estate has grown so much over the last decade which has led to escalating prices in the market and with the correlation between the real estate prices and the rate of volatility makes this research very plausible.
3.5.4 Tests of CAPM
Many tests have been done to evaluate whether or not the tests for CAPM are accurate or not.
A consequence of the popularity and the impact the Capital Asset Pricing Model had on financial asset valuation, there are a lot of research and tests done on whether or not the model is accurate.
Black, Jensen and Schole conducted an empiri...
... middle of paper ...
...asset pricing model which is one of the fundamental models in finance that describes the relationship between risk and return. Further, the validity of the model is evaluated.
Further, there is a discussion of the Fama French Model as an expansion to the CAPM that adds value and size factors to the market risk factor.
Then, the arbitrage pricing theory was introduced and discussed. The theory combines several risk factors, both systematic and unsystematic risk in the calculation of required rate of return.
The chapter continues with a short description of stock features and the Nordic stock exchanges. The real estate market and return is discussed and the subject is further investigated through descriptions of existing empirical evidence. Previous market efficiency and volatility tests on the real estate stock market are examined and also earlier tests on CAPM.
Need Writing Help?
Get feedback on grammar, clarity, concision and logic instantly.Check your paper »
- Foreclosure.com Scholarship Program In existence is $150,000, specifically set aside for the purchase of distressed real estate. This essay will outline a detailed strategy ensuring a maximum return in regard to the financial investment made on the home. Including a description of distressed real estate and foreclosure in addition to how utility can play a role in the decision-making process. Distressed Real Estate and Foreclosure Distressed Purchase Collateral for the defaulted loan. Distressed real estate involves making a distressed purchase.... [tags: Real Estate ]
933 words (2.7 pages)
- A fast growing trend in today’s rocky real estate market; buy a house, flip it and sell it quickly to earn a lucrative profit. In today’s real-estate market you have to be smart about the purchase you make and do your homework. Choosing the right neighborhood, a home with good bones, a large lot, and quiet street are key factors in producing a profitable investment. Choosing a home in sketchy transitional areas and over improving for the type of market can leave a real estate investor with a property that stays on the market, causing the investor to loose profit and have to lower his asking price below market value.... [tags: Real Estate ]
1884 words (5.4 pages)
- Many Americans today live in conditions of urban blight, stranded in marginalized areas which are not viewed as attractive investments by developers. Yet properties in these neighborhoods can yield immense benefits to the developer’s pocketbook as well as his conscience. All distressed areas have characteristics to recommend them, if one is willing to take risks and reject myopic thinking these appealing aspects can be harnessed to generate profits and revitalize the surrounding community. One city struggling with vast tracts of neglected real estate is Buffalo, NY.... [tags: Real Estate ]
1251 words (3.6 pages)
- This paper goes into detail about becoming a real estate agent in Ontario. It talks about how there are many benefits that go along with the occupation which include making your own work schedule. It also talks about how there many negatives such as not making any money in the first few months of working as a real estate agent. In order to become a real estate agent, people must complete several courses offered by the Ontario Real Estate Association College. In addition to the completion of the courses, people must register with the Real Estate Council of Ontario.... [tags: Real estate, Property, Real property]
1471 words (4.2 pages)
- The most formidable aspect in real estate has to be maintaining one’s career. Although there are many agents in this career field, the competitive environment portrayed daily makes this career one that may prove to be unsuitable for the meek. Negotiations, persuasion, debate and often a frequent contest for supremacy in the agency are recurring tasks when trying to sell property to clients. One could think of this as similar to the board game “Monopoly”, in reverse. Rather than trying to own all the property around, these “players” attempt to sell as much land as they possibly can.... [tags: Real Estate Career Essays]
1938 words (5.5 pages)
- It is estimated that approximately 15% of home purchase transactions are done without the services of a real estate agent. The reason why many home buyers prefer to go it all solo is because buyers’ realtors earn a commission from the sale proceeds. Money however is not the only motivation that drives home buyers to lock out real estate agents from the sale transaction. As a home buyer, you will prefer being more hand-on throughout the whole process instead of taking advice from someone who has a financial interest in the deal.... [tags: Real estate, Real estate appraisal, Estate agent]
1053 words (3 pages)
- Commercial real estate is any property other than a single family home or a residential lot in a neighborhood. The commercial real estate market is handled very similarly industrial and residential real estate markets. The commercial real estate market goes through ups and downs just like any other investment market however investments into commercial real estate can be a very wise decision. Commercial real estate is similar to industrial and residential real estate in that when you buy it you are buying a building or land.... [tags: Real Estate]
974 words (2.8 pages)
- The real estate industry is an industry that has been growing in the modern times today as trends are consistently shifting in the market and as people realize the importance it plays in the success of a business. Real estate is a principle that deals with property which has now been a source for many job prospects. Among a few of these jobs that have been influenced from real estate would be a property manager, property appraiser, and a real estate agent. These three careers will be further analyzed and explained throughout the paper which will ultimately result in me picking a career that would best fit my interests.... [tags: Property, Real estate, Property management]
1489 words (4.3 pages)
- IT In Real Estate ABSTRACT Real estate is a very vast field it is growing day by day and it's not easy for buyer, seller or renter to get the information they require. There are many agents and agencies to whom people have to contact or visit to get the information which waste a lot of time and tiring and sometimes they are also not reliable ,so for easing this problem IT is playing it part by making real estate websites so that its easy for the buyer to find their desired property by searching all the properties available in different areas ,in the same way seller add their property and get it sold easily and people who are searching for property to rent can also find all the property ava... [tags: Information Technology Real Estate]
944 words (2.7 pages)
- Geographic Technology in Real Estate: A Technology Assessment Report Introduction Real estate is defined by the Barron’s Dictionary of Real Estate Terms as the “land and everything more or less attached to it. Ownership below to the center of the earth and above to the heavens.” This definition clearly conveys the geographically fixed nature of real estate and the inherent risk associated with this characteristic that is not found in other financial assets such as stocks and bonds. It is the identification and quantification of these risks that dominates the real estate decision.... [tags: Geography Real Estate]
2330 words (6.7 pages)