The rising interest-rate environment in early 1994 in the United States raised questions by investors as to how REITs will react to interest-rate movements. This study analyzes the movement of REIT price changes during past interest-rate cycles. The results indicate that REIT price movements have a low correlation with changes in interest rates and a lower correlation with interest rates than with movements in the stock market as a whole. The findings lead to a call for research into other areas in order to ascertain the determinants of REIT price movement.
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Mueller et al. (1995) studied this question.
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