Leverage
Definition
Using borrowed money to amplify returns (and losses). Measured as the ratio of debt to equity or assets to equity.
Example
Buying a $1M home with $200K down is 5× leverage on home equity.
Using borrowed money to amplify returns (and losses). Measured as the ratio of debt to equity or assets to equity.
Buying a $1M home with $200K down is 5× leverage on home equity.