Posts Tagged ‘blue chip’
Treasury Rates and U.S Real Estate
March 25th, 2010 | 
Author: 
Reuters reports that two-year notes sold by Berkshire Hathaway Inc. in February yield 3.5 basis points less than Treasuries of similar maturity. In school I learned that investing in international real estate is risky because of differences in property rights; political risk including layers of taxations; and financial risk such as foreign exchange risk. There are several ways one can try to adjust account for international investment risks. One way is to use the adjusted NPV model proposed by Hayden and Musa (1990). Unlike the standard DCF model which discounts the cash flows by the discount rate, the international DCF model multiplies the Cash Flows by the Forward Exchange Rate in the numerator, and uses a discount rate that incorporates political risk, labor risk, and un-hedged currency risk. Read the rest of this entry »
Posted in Banking & Finance, Economy | 
Tags: Berkshire Hathaway, Bloomberg, blue chip, cash flows, CBO, commercial real estate, corporate bonds, corporate yields, currency risk, DCF model, economic recession, foreign exchange rate, GDP, Green international, international real estate, NPV, Reuters, risk, treasuries, Treasury yields | 
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