Download Property Futures and Securitisation–The Way Ahead by Julian Roche PDF

By Julian Roche

This e-book offers an research of the makes an attempt in either US and united kingdom to chase the 'Holy Grail' of liquid estate; the trading of small achievable chunks of estate and making a industry like these for stocks, gilts and derivatives. this is often the 1st booklet to discover liquid estate from an insiders point-of-view, with assurance of all of the matters and difficulties. a realistic perception is equipped into the recommendations which may be hired to create liquidity within the estate industry, and the advantages that may consequence from the sort of phenomenon. This booklet should be of curiosity to participants of the institutional funding global, chartered surveyors, estate pros and the monetary advisory group

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The loss is 15 index points @ £ 1 0 0 each X 2 5 0 contracts, a total of £ 3 7 5 0 0 0 . Obviously there is no reason why the loss from a failed speculative venture should be greater than the benefit from a successful one. If a market is in equilibrium, economic theory suggests, the chance of its moving up is the same as that of its moving down. In practice the existence of hedgers complicates any futures market, which does not wholly consist of speculative traders. There are also modest transactions costs to consider.

He made assumptions as follows: 1. The cost of financing was assumed to be LIBOR. Edwards noted that although investors in property, as with other markets, do not finance 27 PROPERTY FUTURES AND SECURITISATION - THE WAY AHEAD themselves or lend surplus funds at LIBOR, this represents an identifi­ able point of comparison between the average cost of borrowing and the average deposit rate for surplus funds. For any one investor or tra­ der, to calculate fair value might produce different results depending on the particular cost of borrowing and rate of return to assets facing the particular investor or trader.

Megabank now disposes of FFF as its advisers. The wrong reason to do so would be on the basis that their advice to hedge was wrong: the right basis would be that their forecast was very inaccurate; FFF, could only say that at the time, the market — and Megabank themselves — shared that view of the future. It is worth noting that by using commercial property capital value and commercial rent futures together, as was possible on the London Fox PFM because both contracts were traded, it was possible to hedge (and trade) yields as well as capital values and rents.

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