A Lender Requires a 1

question 15

Multiple Choice

A lender requires a 1.20 debt coverage ratio as a minimum.If the net operating income of a property is $60,000,what is the maximum amount of debt service the lender would allow?

• A)$30,000
• B)$50,000
• C)$60,000
• D)$72,000

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Definitions:

Equilibrium Interest Rate

The interest rate at which the demand for money in an economy equals the supply of money, establishing a state of balance in the financial markets.

Real Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing or the true return on an investment.

Inflation-adjusted

A method of measuring financial amounts after accounting for changes in price levels, preserving true purchasing power over time.

Effective Usury Laws

Regulatory laws that set maximum interest rates on loans, intended to protect consumers from exorbitant or unfair lending practices.