Domande riguardo a frasi esempio con, spiegazione d'utilizzo di "Levered"s

A: "Margin": A "margin loan" is money borrowed from a broker to finance the purchase of an investment.

"Levered" means that borrowing substantially increases or decreases your rate of return.

Suppose you buy a stock for $100. If it goes up to $140, you have earned a 40% return. If it goes down to $60, you have a 40% loss.

But suppose you only pay $40 for the stock, and borrow $60. Now your return is $40 on a $40 investment, or 100%!

On the other hand, what if the stock goes down $40? If the stock goes down to $60, you sell the stock to pay off the loan, but you have lost all of your $40, you have 100% loss.

(For simplicity, I ignore interest payment on your borrowing of the $60).

By "levering" the transaction, you substantially increase its percentage gain or loss.

Another way to say "levering" is "using leverage".

So:

"Rick was levered with margin loans:" means that Rick borrowed money to buy investments.

A: They are talking about financial leverage, when a business uses borrowed money or money they don't have on hand to buy stock, buy another company or start a new project. Because this is money they don't actually have, the risk is very great. If anything goes wrong, the business is heavily in debt and may go bankrupt. Leverage is very common in business, but also risky.