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Suppose that the equity risk premium (the expected equity return - risk-free rate) is 5% for an equity position when the loan-to-value ratio (LTV) is
Suppose that the equity risk premium (the expected equity return - risk-free rate) is 5% for an equity position when the loan-to-value ratio (LTV) is 0.5.
When the LTV increases to 0.8 while the property-level risk premium is unchanged, the new equity risk premium will be________% due to the leverage effect.
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