If the buyer commits $100,000 of his or her own funds and borrows $900,000 to purchase $1 million in assets, then the leverage ratio is

Name: If the buyer commits $100,000 of his or her own funds and borrows $900,000 to purchase $1 million in assets, then the leverage ratio is
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Quizplus · Accepted Answer

The leverage ratio is calculated by dividing the total assets by the equity. In this case, $1,000,000 in assets divided by $100,000 in equity results in a leverage ratio of 10 to 1.

If the Buyer Commits $100,000 of His or Her Own