Leverage (Finance)

Leverage (Finance)

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Description

Please note that the content of this book primarily consists of articles available from Wikipedia or other free sources online. In finance, leverage is a general term for any technique to multiply gains and losses. Common ways to attain leverage are borrowing money, buying fixed assets and using derivatives. Important examples are: A public corporation may leverage its equity by borrowing money. The more it borrows, the less equity capital it needs, so any profits or losses are shared among a smaller base and are proportionately larger as a result. A business entity can leverage its revenue by buying fixed assets. This will increase the proportion of fixed, as opposed to variable, costs, meaning that a change in revenue will result in a larger change in operating income. Hedge funds often leverage their assets by using derivatives. A fund might get any gains or losses on $20 million worth of crude oil by posting $1 million of cash as margin.show more

Product details

  • Paperback | 88 pages
  • 152 x 229 x 5mm | 141g
  • Commun
  • United States
  • English
  • 6136684594
  • 9786136684598