Sunday, December 10th 2017

Question

What are the advantages of financial leverage?

Interesting Question?   (6)   (9)



Answers (1)

19th Nov 2009 by Daniel Cross, ChFC

Using financial leverage such as margin accounts, options, and futures, can be very advantageous for an investor educated in these products. It allows an investor to control and trade far more than a direct purchase would allow. This can result in above average returns. For example: Let's say you buy 100 shares of XYZ at $50 a share and in one year, appreciates to $65. You would have made 30%. Now let's say you bought using 60% margin with a borrowing rate of 7%. You would have made 45.33% instead. The downside is that losses on margin are even greater because of the interest rate attached to the loan amount.

Like This Answer?   (0)   (0)
This answer is the subjective opinion of the writer and not of FinancialAdvisory.com



19th Nov 2009 In Finance 1 Answers | 580 Views
Subjects: financial leverage,

Answer This Question / Give Your Opinion
What are the advantages of financial leverage?


Answer: *

What country is this answer relevent to? *
Your Name: *

Enter Verification Number: *


Give Your Opinion
What are the different types of Bank of Scotland home loans?
Share a simple answer to help inform others:
Specific to any country?
First name / Alias

• Your answer will be posted here:
What are the different types of Bank of Scotland home loans?
Unanswered Questions in Finance
What are different types of small business loans?
Getting a secured loan?
Can i use a student loan to buy a car?
What is tax financing?
What is a variable funding note?

Answered Questions in Finance
How to raise venture capital?
Where can i get an auto loan with bad credit?
What is 80 20 financing?
How to stay out of debt?
what can i do about credit card debt?
Ask A Question
Get opinions on what you want to know:
Specific to any country?