Finance
The loan-to-value ratio (LTV) is calculated as:
ASale price divided by appraised value
BLoan amount divided by the lesser of sale price or appraised value✓ Correct
CAppraised value divided by loan amount
DEquity divided by market value
Explanation
LTV = Loan Amount ÷ Lesser of Sale Price or Appraised Value. Lenders use LTV to assess risk: the lower the LTV, the more equity the borrower has and the less risk for the lender.
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