Property Derivative

AAA

DEFINITION of 'Property Derivative'

A type of financial product that fluctuates in value depending on the changes in the value of a real estate asset, usually an index. Property derivatives provide investors with exposure to a specific property market without having to buy and sell actual buildings.

INVESTOPEDIA EXPLAINS 'Property Derivative'

It is important to note that these products generally incorporate the use of advanced instruments such as swaps, forwards and property index notes, which is why this market is dominated by sophisticated investors and large institutions.

RELATED TERMS
  1. NAHB/Wells Fargo Housing Market ...

    An index based on a monthly survey of members belonging to the ...
  2. Financial Analysis

    The process of evaluating businesses, projects, budgets and other ...
  3. Risk Analysis

    The study of the underlying uncertainty of a given course of ...
  4. Flow Derivative

    A securitized product that aims to provide maximum leverage. ...
  5. Real Estate Investment Trust - ...

    A security that sells like a stock on the major exchanges and ...
  6. Investment Real Estate

    Real estate that generates income or is otherwise intended for ...
RELATED FAQS
  1. How does beta measure a stock's market risk?

    Beta is a statistical measure of the volatility of a stock versus the overall market. It's generally used as both a measure ... Read Full Answer >>
  2. How are swap agreements financed?

    Since swap agreements involve the exchange of future cash flows and are initially set at zero, there is no real financing ... Read Full Answer >>
  3. What are the risks involved with swaps?

    The main risks associated with interest rate swaps, which are the most common type of swap, are interest rate risk and counterparty ... Read Full Answer >>
  4. What is the difference between a forward rate and a spot rate?

    The forward rate and spot rate are different prices, or quotes, for different contracts. The forward rate is the settlement ... Read Full Answer >>
  5. What are the primary differences between a closed end investment and an open end ...

    The primary differences between closed-end funds and open-end funds lie in how they are structured and how they are bought ... Read Full Answer >>
  6. What is the difference between a hostile takeover and a friendly takeover?

    A hostile takeover occurs when one corporation, the acquiring corporation, attempts to take over another corporation, the ... Read Full Answer >>
Related Articles
  1. Options & Futures

    Are Derivatives A Disaster Waiting To Happen?

    They've contributed to some major market scandals, but these instruments aren't all bad.
  2. Home & Auto

    How To Assess A Real Estate Investment Trust (REIT)

    Find out why funds from operations is a superior measure of REIT performance.
  3. Home & Auto

    Simple Ways To Invest In Real Estate

    Owning property isn't always easy, but there are plenty of perks. Find out how to buy in.
  4. Taxes

    Avoid Capital Gains Tax On Your Home Sale

    If you have property to sell and want to avoid capital gains tax, a Section 1031 exchange may be the answer.
  5. Home & Auto

    5 Things Every Real Estate Pro Knows

    Find out how to stop chasing the market and start leading it.
  6. Forex

    10 Cities Leading Bitcoin Adoption

    An overview of the global cities leading the way in using the virtual currency Bitcoin.
  7. Forex

    Beware of these Five Bitcoin Scams

    We look at five bitcoin scams and how to protect yourself from fraud.
  8. Investing

    REITs 101: How They're Regulated

    Here's everything you need to know about REITs in less than five minutes.
  9. Professionals

    Real Estate Advice for Recent Retirees

    What retirees need to consider when it come to making real estate decisions.
  10. Mutual Funds & ETFs

    10 Most Famous Hedge Fund Managers

    The most famous hedge fund managers have made billions, but their fame might not always result from their financial successes.

You May Also Like

Hot Definitions
  1. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  2. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  3. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  4. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  5. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
Trading Center