Suppose you purchase a new home for $150,000 making a down payment of 30% and taking out a mortgage on the balance.
a) What is the return on your investment in your home if one year later the price of the home increases by 20%?
b) What is your return if the price of the home decreases by 20%?
c) How would your answers to parts a) and b) change if your down payment is only 15%? Explain why the return on your payment changes with the size of your down payment.