Leverage ratio, please help!
Last year Hubert bought a house in Hanover for $100,000. Suppose that Hubert paid $50,000 as a down payment and took out a mortgage loan of $50,000 to cover the remaining amount.
Hubert’s simple leverage ratio is ___________. Suppose that the price of the house falls by 4%. If Hubert sells his house now, his capital loss will be _________. ( Ignore selling costs and maintenance.) A 4% fall in the price of the house causes a percentage loss of ______ in Hubert’s equity.