Question

What is leverage?

Answer 1

Leverage is the use of borrowed funds to increase the potential return of an investment. It involves using debt to finance an investment with the goal of magnifying the gains or losses. By using leverage, an investor can control a larger position in an asset without having to put up the full purchase price.

Answer 2

Leverage in finance refers to the use of borrowing money to increase the potential return on an investment. It allows investors to use borrowed funds to amplify their positions in the market, which can lead to higher profits if the investment performs well. However, it also increases the potential for larger losses if the investment does not go as planned.