If Lenders Specify a Loan-To-Value Ratio of 80 Percent,then a Buyer

question 103

True/False

If lenders specify a loan-to-value ratio of 80 percent,then a buyer must make a 20% down payment on the purchase of a home.

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, showing the proportion of fixed to variable costs.

Fixed Costs

Overheads, such as rent, insurance fees, and payroll, that stay the same, independent of the amount of goods produced or sold.

Sensitivity Analysis

An analysis method to evaluate how changes in the values of an independent variable influence a dependent variable, based on a set of given assumptions.

NPV

Stands for Net Present Value, a method used in capital budgeting to evaluate the profitability of an investment or project.