Specific objectives are as follows: 1. Discuss objectives of the lender and the borrower; 2. Conceptualize the roles of upside and downside return, expected return, down payment (collateral), and interest rate in determining the terms for the loan agreement; 3. Evaluate the lender risks in leveraged financing, specifically the borrower's risk shifting-behavior its implications; 3. Illustrate the flaw of averages (Jensen's inequality); 4. Reinforce basic modeling skills through analysis and creation of a spreadsheet model or verification of model presented; 5. Practice decision-making under uncertainty using simulation models; 6. Master multiple regressions skills, building models with dummy variables and using the regression to provide distributional inputs into simulation models.