Two investors are arguing about the types of investment made by real estate investment trusts. One investor believes that REITs are investors inreal estate properties. The other investor believes that REITs provide financing for the purchase of real estate properties. The two investors ask you: Who is right? How would you respond to theseinvestors?
Answer to relevant QuestionsWhat are the two types of mortgage REITs? What costs are incurred by an investor when purchasing a mutual fund? Comment on the following statement: “If an interest-rate model allows the possibility of negative interest rates, then it is not useful in practice.” What is an arbitrage-free interest-rate model? Answer the below questions. (a) What is meant by the option-adjusted spread? (b) What is the option-adjusted spread relative to?
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