According to Schweser, the discount rate has to be higher than the mortgage rate. Why so?
Equity vs. debt. The equity owner has only a residual claim to the assets; hence, more risk than the debt-holder.
According to Schweser, the discount rate has to be higher than the mortgage rate. Why so?
Equity vs. debt. The equity owner has only a residual claim to the assets; hence, more risk than the debt-holder.