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Leonard and Penny buy a home. They put $20,000 down and borrow $200,000. Sheldon and Amy also buy a home. They put $30,000 down and
Leonard and Penny buy a home. They put $20,000 down and borrow $200,000. Sheldon and Amy also buy a home. They put $30,000 down and borrow $190,000. Suppose further that the market collapses immediately and both couples are forced to sell their homes for $180,000. What is the percentage rate of loss for each couple and how does this explain the problem inherent with leverage?
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