Investing with borrowed money in the hope of multiplying gains If you buy $100,000 worth of stock and its price rises to $110,000, you've earned 10% on your investment But if you leveraged the deal by putting up only $50,000 of your o wn money and borrowing the rest, the same $10,000 increase would represent a 20% return on your money, not counting interest on the loan The flip side of leverage is that it also multiplies losses If the price of the stock goes down by $5,000 on the all -cash deal, your loss would be 5% of your $100,000 investment On the leveraged deal, your loss would be 10% of the money you put up and you'd still have to pay back the $50,000 you borrowed
The exploitation by an organisation of its existing resources to their fullest extent
To purchase a property by making the smallest down payment possible and financing the largest loan amount possible
investing with borrowed money as a way to amplify potential gains (at the risk of greater losses)
If a school offers a talented student extra financial aid, regardless of need, the student is more likely to enroll Leveraging is the controversial practice of figuring out how much it will take to attract such students and customizing aid offers to optimize the quality of the incoming class