Which statement is true ex ante?
A) Leverage normally increases the owner's income return (cash yield) if you pay market value for the property.
B) Leverage normally increases the owner's income return (cash yield) if you pay more than market value for the property.
C) Leverage normally increases the owner's total return (including appreciation) if you pay market value for the property.
D) Leverage normally increases the owner's total return (including appreciation) if you pay more than market value for the property.

Question

Quizplus · Accepted Answer

Leverage can enhance total returns when the property is bought at market value, as the cost of borrowing is typically lower than the return on investment, including appreciation.

Which Statement Is True Ex Ante