Global Monetary Economics
The loan-to-value ratio (LTV) is a financial term used to express the ratio of a loan to the value of an asset purchased. It is primarily used by lenders to assess risk, with a higher LTV indicating greater risk for the lender, as it suggests that the borrower is financing a larger portion of the asset's value. This metric plays a crucial role in bank lending practices and credit assessment, as it helps determine loan approval and interest rates.
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