True/False

1- the total return generated by a particular property is 9% per year,

and it is possible to secure debt on this property at an interest rate
of 8.5% per year. In this case, increasing leverage will increase the
expected return to equity.
True; increasing leverage will result in increasing the total return on
equity investment by increasing risk premium on that investment. It
can also however increase the risk of equity.
2- in order to achieve the constant amortization rate implied by its
name, a constant-amortization mortgage (CAM) will always have the
same monthly payment.
False; in a constant amortization mortgage the principle will
amortize at a constant rate meaning that each month in addition to
interest on balance outstanding the borrower repays a constant
fraction of L/E which causes a decreasing pattern of payments every
month.