Unlike the Debt Coverage Ratio, the Debt Yield Ratio (DYR)

question 10

Multiple Choice

Unlike the debt coverage ratio, the debt yield ratio (DYR) is not affected by the interest rate or amortization period of the loan; the DYR is simply a measure of how large the NOI is relative to the loan amount. Lenders who rely on this ratio are typically willing to accept a minimum DYR of

• A) 10%
• B) 20%
• C) 60%
• D) 80%

---

Definitions:

Recognition

The process of incorporating an item into the financial statements of an entity, including measuring its value.

Positive Theories

Theories that attempt to explain how things are in the world of finance and accounting, based on empirical evidence and facts.

Real-World Observations

Empirical data or evidence gathered from the real world, used to inform or support research, theories, and decision-making.

Positive Accounting Theory

A theory that explains why firms elect certain accounting practices based on hypotheses about management behavior.