| Leverage |
 |
The
use of various financial instruments or borrowed capital such as margin
to increase the potential return of an investment.
Also the amount of debt used to finance a firms assets, a firm with
significantly more debt than equity is considered to be highly leveraged.
|
 |
Leverage
can be created through options, Futures, Margin and other financial
instruments. Leverage is usually the idea of increasing one's risk.
For example $1000 could be invested in 10 shares of Microsoft stock,
but to increase leverage $1000 could also be invested in 5 (as an
example) options contracts to expose one's risk to 500 shares. It
all comes down to risk vs. return. |
|
|
|
|
Dictionary
