Gopal Chandu
What is leveraging
Leveraging refers to the use of debt or other financial instruments to increase the potential return on an investment. In the financial world, leverage is often used to increase the potential returns of an investment by using borrowed money to fund the purchase of an asset. For example, if an investor uses leverage to buy a stock, they may only have to put up a small portion of the purchase price, with the rest being financed through a loan. If the stock price increases, the investor can sell the stock and pay off the loan, potentially making a larger profit than if they had bought the stock without leverage.
However, leveraging can also increase the potential losses of an investment if the value of the asset decreases. In this case, the investor may have to sell the asset at a loss to pay off the loan, resulting in a net loss. Leveraging can therefore be a risky strategy, and it is important for investors to carefully consider the potential risks and rewards before using leverage.
Gopal Chandu
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