p u d a 1-a q 1 d a k 1 1 a

u d h 1-h

u d h Y h

e 1 d 0 u-1 0

v d

h 1-h Y h

v d

VariableEBVEGV Marginal belief Marginal belief Marginal belief House price House price House price Mortgage price Mortgage price Mortgage price0.19 VariableEBVEGV Interest rate Interest rate Interest rate Leverage Leverage1.36 Leverage1.64 Volatility Volatility Volatility

VariableBVGV Marginal belief Marginal belief Marginal belief House price House price House price Mortgage price Mortgage price Mortgage price VariableBVGV Interest rate Interest rate Interest rate Leverage Leverage Leverage Volatility Volatility Volatility

VariableBV n=0 BV n=0.2 GV n=0.2 M. belief M. belief M. belief H. price H. price H. price M. price M. price M. price VariableBV n=0 BV n=0.2 GV n=0.2 Int. rate Int. rate Int. rate Leverage Leverage Leverage Volatility Volatility Volatility