Mortgages Increase the rlsk faced by homeowners.

a$.$ Explain how.

The mortgage is leverage for the homeowner, and leverage $($Click to select$)vv$ risk.

b$.$ What happens to the homeowner's rlsk as the down payment on the house rises from $22$ percent to $50$ percent?

Instructlons: Enter your responses rounded to one decimal place.

With a down payment of $22$ percent, the leverage ratio is

With a down payment of $50$ percent, the leverage ratio Is

A down payment of $50$ percent $($Click to select$)$ the leverage ratlo by a fiactor of relative to a down payment of $22$ percent. $($Hint: Refer to the Tools of the Trade: The Impact of Leverage on Risk; Leverage ratio $=$ cost of the Investment $/$ owner's contribution to the purchase$)$