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There is a $100M property (Property A ) that will be worth either $117M with a probability of 0.4 or $93M with a probability of
There is a $100M property (Property A ) that will be worth either $117M with a probability of 0.4 or $93M with a probability of 0.6 in one year. In this exercise, you will analyze the return to a non-recourse collateralized loan and the levered equity. 8. What is the payoff to the levered equity position in Property A for each state of nature at t=1 ? The equity investor (borrower) uses Loan B to finance the property investment. if the property value is 117 ; if the property value is 93
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