In the introduction to the 4th video of lectures series Finance I on MIT Opencurseware (https://www.youtube.com/watch?time_continue=166&v=hyc8h5T76BE), Andrews Lo talks about the net leverage ratio of Lehman&Brothers, showing that it was around 16% on 2007. To explain the meaning of this number he makes the example of a mortgage.
Let's suppose I want to by a house for \$500K. I pay \$100K (i.e. 20%) upfront and I borrow $400K from a bank. He then says that the net leverage ratio is how much I am exposed compared to how much capital I manage. In this case it is 5:1.
My question is: shouldn't it be 4:1? I am exposed by \$400K, not by $500K. I tried to Google and I saw different definitions for the leverage ratio, but none of them seems to give 5:1