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In the Chapter 19 lecture, we spent a great deal of time discussing Exhibit 19-9. This exhibit details how the IRR to the equity investor
In the Chapter 19 lecture, we spent a great deal of time discussing Exhibit 19-9. This exhibit details how the IRR to the equity investor on the Centre Point investment varied with the assumed loan-to-value ratio (assuming a discrete probability distribution of growth in potential gross income and holding all other assumptions constant). Which of the following statements most accurately captures the main takeaway/conclusion from our discussion of that Exhibit? Increased leverage increases the mean (expected) IRR and decreases the standard deviation of the IRR O Increased leverage decreases the mean (expected) IRR and increases the standard deviation of the IRR O Increased leverage increases the mean (expected) IRR and increases the standard deviation of the IRR O Increased leverage decreases the mean (expected) IRR and decreases the standard deviation of the IRR
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