1. Leverage, risk, and return Consider the following scenario: Kate decides to buy a $300,000 house. She makes an initial down payment, and takes out a mortgage on the remaining value of the house. The down payment is Kate's initial equity in the house. After 1 year, Kate sells the house. Let's ignore any interest Kate paid on the mortgage. Calculate Kate's return on her initial investment in each of the following scenarios. a. Let's say that Kate makes a 10% down payment: i. What is Kate's initial investment (initial equity) in the house? ii. Fill in the following table: b. Now, let's compare to what happens if Kate makes a 20% down payment: i. What is Kate's initial investment (initial equity) in the house? ii. Fill in the following table: c. Interpret these tables: What do you learn from this example? d. This example highlights the importance of leverage for households, but the same principles apply to banks. Apply what you learn from this example to the article "When she talks, banks shudder" (from The New York Times, available on Blackboard). Specifically, explain why Professor Anat Admati argues that "Regulators...need to worry less about what banks do with their money, and more about where the money comes from