Question

When adding real estate to an asset allocation program that currently includes only stocks, bonds, and cash, which of the properties of real estate returns affect portfolio risk?

Answer 1

1. Standard deviation.

2. Correlation with the return of other asset classes.

Step-by-step explanation:

The underlying determinants of the

standard deviation of property returns are the factors that cause fluctuations in property rents and

property values. The larger the fluctuations or market rents and prices in a property market the larger the standard deviation of

property returns in that market will be.