CHAPTER 12 Financial Leverage and Financing Alternatives TRUE/FALSE 1. Financial leverage is defined as the benefits that may result to an investor by borrowing money at a rate of interest that is lower than the expected rate of return on total funds invested in a property. 2. Properties with a higher ratio of debt are considered to also have a higher risk assuming everything else is equal. MULTIPLE CHOICE 3. A lender requires a 1.20 debt coverage ratio as a minimum. lf the net operating income of a property is $60,000, is maximum amount of debt service the lender would allow? what the (A) $30,000 (B) $50,000 (C) $60,000 (D) $72,000