What would the graph of expected payoffs of the loan

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1. Repeat the example if the loan promises to pay off $20,000. Such a loan is risk free. How does the riskiness of the project "Full Building Ownership" compare to the riskiness of the project "Levered Building Ownership"?

2. If there were infinitely many possible outcomes (e.g., if the building value followed a statistical normal distribution), what would the graph of expected payoffs of the loan as a function of promised payoffs look like?

Reference no: EM131235042

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