🎓CFA Final Prep All Topics

Deck 5 – Natural Resources

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Question

Why does the ability to keep trees "stored on the stump" matter for timberland investors?

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Answer

They can delay harvest when prices are low and wait for better prices.

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Question

Why is raw land considered the riskiest land-based natural resource investment?

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Answer

It has no income and depends entirely on speculative price appreciation.

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Question

How does farmland differ from raw land in its return sources?

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Answer

Farmland adds crop or lease income plus land appreciation.

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Question

Why can farmland improve portfolio diversification?

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Answer

It has historically near-zero correlation with stocks and bonds.

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