Question $30$

$2\mathrm{.}7$ pts

Suppose we have the following real estate speculation scenario for a $1$ year investment:

Purchase price of house: $$200,000$

Equity: $$190,000$

Debt: $$10,000$ e$10\%$ interest

Interest Payments: $$1,000$

What is the leverage ratio in this scenario?

Suppose that real estate prlces are increxing. All else being equal, what would happen if the leverage ratio increased?

$5$: the rate of return would be amplifed in a regative direction

$052632$ ; the rate of return moald be ampled in a regative deection