Timberland

Forest land held for its timber. Return comes from biological growth, timber prices and the land itself, and the harvest can be postponed when prices are poor, because the trees keep growing.

Where you will meet it

Timberland appears in 4 learning outcomes on the CFA syllabus. A few of them:

• Set out the investment features of timberland and farmland
  CFA Level I · Alternative Investments

  “Timberland produces return from biological growth, from the change in timber prices, and from the land itself, and it offers an unusual option: if prices are poor the trees can simply be left to grow, storing value rather than forcing a sale.”

• Explain what sets timberland and farmland apart from other real asset investments
  CFA Level III · Private Markets Pathway

  “Timberland earns returns from biological growth, from timber prices and from the value of the land.”

• Explain what alternative investments contribute within a portfolio spanning several asset classes
  CFA Level III · Portfolio Construction

  “Real assets such as infrastructure, timberland, farmland and commodities can hedge inflation.”

• Analyse how natural resource investments behave in terms of risk, return and diversification
  CFA Level I · Alternative Investments

  “Natural resource investments include raw land, timberland, farmland and commodities, and each has its own sources of return.”

Practise it

• Today's practice question One question, with every wrong option explained.
• Free Level I diagnostic test Twelve questions that show which topics to start with.
• Free finance calculators Check your arithmetic on the exam's core formulas.

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