Download Definition of `Real Asset`

Real Asset
Prepared by :
Akram Hamdy El komey
Supervision :
Dr Emad AbuShaaban
Investments in Real Assets
* Definition
* Advantages and Disadvantages of Real Assets
* Inflation
* Difference between stocks and bonds?
* conclusion
What are Real Assets?
* A real asset is a tangible asset like gold, oil, and real •
estate.
* It has intrinsic value due to its utility. •
* Its value is derived by virtue of what it represents.
Real Assets - Advantages
* An inflation hedge
* Hedge against unknowns, fears
* Effective vehicle for diversification
* Improves portfolio risk-return alternatives
* Low correlation with monetary assets
Real Assets - Disadvantages
* Lack of large, liquid, efficient markets
* Larger commissions & spreads compared to securities
* No current income except from real estate
* Storage and insurance costs
* Unit costs may be high
Hedge against inflation.
Inflation is the increase in the amount of currency required to
purchase goods and services. Commodities can help protect
investment portfolios against inflation because they represent the
value of goods and services, not the value of currency.
Horror of investors:
The high inflation rate is scary for investors because inflation
means a lack in money value associated with that investment,
as well as the lack of royalties they wait her value from their
investments. The alternatives for many investors, when selects
the one it links assets liquid, If a man invest his money in bonds
give him a profit of $ 7 per year, and inflation is 4 it means that
its profit had fallen, and 3 only.
Measuring inflation
Inflation is measured in two ways :
First, calculate the rate of general price, account is taken of
the prices of various goods including food, clothing, fuel and
equipment such as computer, as well as a range of services
such as laundry or cost. Calculates the value of buying these
goods each month, displayed and sold to the public, the
value of procurement for the different periods which usually
months or a chapter (three months) knows how much
inflation and the amount of change in the total price and not
in just one commodity. If there is displacement of the price
increase by half a per cent, this means that there is an
inflation by this amount.
The second way to measure inflation: a measure of the source,
a sampling of goods prices and pricing of the product, any
amount that is determined by the product price for his goods,
and the overall price trend line could see prices going up or
down .
Treatment of inflation
States of the free economy and the strong to pursue price indicators for
inflation and its creator, hence the treatment begins. Take the capitalist
countries the interest rate to curb inflation, dealing with interest rate
increases or decreases to address inflation, when there are signs of
inflation began to appear, the Central Bank increase interest rates, and
the reason is the desire to withdraw money from the market and to the
process of providing or investing, when high interest rates, the temptation
in investment will rise to the benefit to the investor.
Bonds Defined
Bonds Defined Bonds are, at their basis,
loans given to either a government or
to a corporation .
Stocks
Stocks are one of the only financial assets that do
not have an agreed upon ending date. Investing
in stock means the investor has part ownership
of a company and shares in the company’s
profits and losses. He or she can keep the stock
for any length of time or decide to sell it to
another investor.
conclusion
* The real wealth of the society which determines the size of production
capacity where many factors, such as infrastructure, buildings and
industrial machinery production capacity , It is possible, subject to the
production of real production assets, those assets are land, buildings,
machinery and know-how and technology used in the production process.
* Specifies the distribution of income and assets in the economy, the
financial assets are divided into fixed interest assets such as bonds,
stocks, derivatives such as futures and contracts for the right to choose.
Thank you to all the students of good
listening
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