Q 16.10. In the text, we just stated that levered equity was riskier than ownership which was
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Q 16.10. In the text, we just stated that levered equity was riskier than ownership which was riskier than the bond. Let's confirm this. Work out the standard deviations of the rates of return for each of the three possible types of claims (full ownership, debt, and levered equity) in the building example in the text. What is their risk-ordering?
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