Q6.17. Compare a junk mortgage (with its requisite junk equity, receiving payments only if the junk mortgage
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Q6.17. Compare a "junk" mortgage (with its requisite junk equity, receiving payments only if the junk mortgage is paid off) that promises to pay off $70 with a "solid" mortgage (with its requisite solid equity) that promises to pay off $60. 1. Does the junk mortgage seem riskier than the solid mortgage? 2. Does the junk equity seem riskier than the solid equity? 3. Does the building seem riskier if financed with a junk mortgage rather than with a solid mortgage?
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