Which characteristic most explains why farmland and timberland index returns may appear less volatile than commodity index returns?
Explanation
Appraisal-based private market indexing tends to smooth returns, lowering measured volatility relative to exchange-traded commodity indexes.
Other questions
Which of the following best describes a primary return driver unique to timberland investing compared with raw land?
Which statement is most accurate about farmland compared with timberland?
What is the primary reason many investors use derivatives (futures) rather than physical ownership to gain commodity exposure?
Which formula captures the continuous-compounding relationship between forward and spot commodity prices given cost of carry and convenience yield?
If convenience yield exceeds carrying costs for a commodity, the forward curve is most likely to be:
Which of the following is the least important risk specific to farmland investments?
Which of the following best explains why timberland can provide ESG-related value beyond timber harvest receipts?
Which property of timberland provides the manager with optionality not available for many annual crops?
Which market condition is most likely to increase the convenience yield of holding a physical commodity?
A farmland owner who leases to a tenant and receives fixed rental payments primarily benefits from which source of return?
Which of these investment vehicles is commonly used by institutional investors to manage timberland holdings?
Which of the following best captures why commodity supply is typically slow to adjust to demand shifts?
An investor seeks an asset that historically correlates best with inflation among these options. Which should they prefer based on the chapter's historical evidence?
Which of the following is a correct statement about the difference between raw land and developed real estate investments?
Which is the most accurate description of a TIMO's role?
If an investor wants exposure to a broader set of commodities through a single liquid vehicle that trades on an exchange, which product is most suitable?
Which of the following best explains why farmland investments may be attractive to institutional investors focused on ESG?
Which of the following is the main disadvantage of direct ownership of timberland or farmland for smaller investors?
Which index behavior is most likely when commodity markets are in heavy contango?
An institutional investor wants farmland exposure but with greater liquidity and lower minimum commitments. Which vehicle is most appropriate?
Which of the following best describes why commodity ETFs that hold futures may underperform the spot price of the underlying commodity over time in contango markets?
How does timberland’s investment cycle differ from typical brownfield/greenfield infrastructure stages discussed in related modules?
Which of these statements about farmland owner-operator versus owner-lease (tenant) models is correct?
An institutional investor wants a potentially high-return, high-risk natural resource strategy focused on new development of agricultural plantations. Which strategy label best fits this objective?
Which of the following correctly pairs a natural resource return driver with the asset?
Which natural resource asset historically had higher annualized return but with higher appraisal-based volatility over the 1992–2022 sample shown in the chapter?
Which of the following actions would best mitigate commodity price risk for an owner-operator of a farm?
Which statement best describes why commodity investors may suffer during low-inventory periods if they hold long-only futures positions in contango markets?
Which of these best summarizes why timberland is often concentrated in institutional portfolios in certain countries (such as the US)?
Which of the following is a meaningful difference between commodity futures markets and farmland ownership in terms of price discovery?
An investor is comparing timberland and commodity investments as inflation hedges. Which statement is most consistent with the chapter?
Which of these best explains why an investor might include timberland in a diversified portfolio despite its long horizon and illiquidity?
Which one of the following is NOT a typical direct revenue source for farmland?
Which of the following explains the role of storage costs in the forward pricing of a commodity?
Which of the following is the best reason an investor would use a TIMO for timberland exposure instead of buying individual tracts directly?
Which factor most directly causes backwardation in a commodity forward curve?
Which of these is a common indirect way for investors to gain exposure to commodity returns while avoiding physical storage?
Which of the following best explains why timberland returns may be less correlated with public equities?
Which of the following is a typical financing source for farmland and timberland investments?
Which of the following best describes the inflation performance of commodities in the historical sample presented in the chapter?
Which is the most accurate reason farmland may appear to offer lower volatility in headline indexes than commodities?
Which of the following is an advantage of investing in timberland via a publicly traded REIT-style vehicle compared with direct ownership?
Which of the following is the best description of the 'warehouse' characteristic of timberland noted in the chapter?
When considering tokenization of physical natural resource assets, which advantage does the chapter emphasize?
Which of the following statements about commodity demand and supply dynamics is correct?
Which of the following is NOT typically part of the return to a farmland owner-operator?
Which scenario would most likely reduce the convenience yield on a particular commodity?
Which of the following provides the clearest diversification benefit when added to a stock-and-bond portfolio, according to historical correlations in the chapter?
An investor is constructing a long-term portfolio for inflation protection and low correlation to equities. Based on chapter insights, which allocation tilt is most consistent with those goals?