Forbes  6 hrs ago  Comment 
Leveraged finance volume for the week ended Oct. 21 was $12.5 billion, up from $7.9 billion the prior week but well off September’s pace, when average weekly volume was $23.5 billion. Leveraged loans accounted for $10.7 billion of last week’s...
MarketWatch  Oct 17  Comment 
Measured in another way, lending for housing is shockingly loose.
The Economic Times  Oct 16  Comment 
"Everybody in the family as well as the rest of the group was also involved for more than two decades in the business," Essar Group Director Prashant Ruia said.
The Hindu Business Line  Oct 7  Comment 
With the recently concluded auctions getting bids worth Rs 65,800 crore, Indian telecom operators are now among the highest leveraged in the region, according to analysts. “Such high payouts towar...


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Leverage is the use of margin to increase the potential return of an investment. Leverage can also mean the amount of debt a company uses to finance operations. A company with lots of debt and little equity is classified as highly leveraged.

In the securities business, brokers will typically lend 50 percent of the value of stock to be purchased. Some stocks, who may be viewed as exceptionally risky, may not be eligible for margin purchase; the broker will not lend out funds to purchase those securities.

For example, say you buy $1,000 worth of stock in company ABC at $100 per share. You have a total of 10 shares in company ABC. If you wanted to leverage your $1,000 to increase the potential return on your investment, instead of buying stock in ABC you could buy 4 option contracts at $2.50 each ($2.50 x 100 = $250) and control 400 shares instead of just 10 shares. Keep in mind that both risk and reward are magnified with leverage.

When the leveraged securities in the account begin to witness losses, the broker may issue a margin call. When the value of the equity gets close to the value of the loan, the broker will notify the investor that he needs to add more collateral in the form of cash or more securities. If the investor does not meet the margin call, the broker will sell the equities in the account to pay himself back, and give the rest to the investor. This may cause a problem to the investor. The stock may be depressed, poised to come back, but he is forced to transact. This is why holding leveraged positions is risky and is detrimental to some investing strategies.

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