| The Journal of Real Estate Finance and Economics | |
| Volume 18, Issue 2, Article 6 (Abstract) | |
| Title: | Optimal Leverage in Real Estate Investment |
| Author: | John F. McDonald |
| Abstract: | This article is a theoretical examination of optimal financial leverage for real estate investment in the presence of uncertainty. The main results is to show that uncertainty creates the possibility that a borrower will default on a real estate loan, and that this possibility is the underlying factor in optimal leverage calcualtions for both borrower and lender. |
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