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Topic: Leverage

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Leverage (finance)

Total return swap

Financial mathematics

	Leverage (finance) - Wikipedia, the free encyclopedia
		The term leveraged finance was originally coined by David N. Deutsch and its term for a firm's capital composition.
		Because the percentage increase in a leveraged portfolio is higher by the same ratio as the decrease is higher.
		In a 200% leveraged index it's a 20% increase, to 120, and a 18.17% (9.092) decrease from 120 to 98.2 (120 (1 - (110-100) / 110) * 2).
	en.wikipedia.org /wiki/Leverage_(business) (720 words)

	CONK! Encyclopedia: Donella_Meadows'_twelve_leverage_points_to_intervene_in_a_system (Site not responding. Last check: 2007-11-05)
		She started with the observation that there are levers, or places within a complex system (such as a firm, a city, an economy, a living being, an ecosystem, an ecoregion) where a "small shift in one thing can produce big changes in everything" (compare: constraint in the sense of theory of constraints).
		The understanding of these leverage points would be powerful information to solve major global problems such as unemployment, hunger, economic stagnation, pollution, resources depletion, and conservation issues.
		Another leverage point is in the length of delays.
	www.conk.com /search/encyclopedia.cgi?q=Donella_Meadows'_twelve_leverage_points_to_intervene_in_a_system (2055 words)

	Leverage - Wikipedia, the free encyclopedia
		Leverage is related to torque; leverage is a factor by which lever multiplies a force.
		Other common devices that achieve leverage include the wrench, various pulley arrangements, a jack, and hydraulic brakes.
		The word leverage is also used with metaphorical meanings of the word force.
	en.wikipedia.org /wiki/Leverage (176 words)

	Capital Leverage: Financial Intermediation
		Commercial banks, whose leverage ratio is the ratio of their liabilities to their net worth, have much higher leverage ratios than corporations in general.
		Leverage will do this if the rate of return on the invested funds is significantly higher than the interest rate paid on the borrowed funds.
		In the second case the leverage ratio was 0.5 and the swing in the rate of return was 6 percent for a 4 percent swing in the rate of return on assets.
	www2.sjsu.edu /faculty/watkins/leverage.htm (1319 words)

	Explanation of Leverage Plots (Site not responding. Last check: 2007-11-05)
		Leverage charts depict those areas which yield the “biggest bang for the buck.” That is, working on the fewer, relatively higher leverage areas will have more affect on public opinion than working on lower leverage areas.
		Leverage is a function of both customer satisfaction & power to predict satisfaction with the area score (or in the case of the areas themselves, the power to predict the overall satisfaction question)--as shown in the plot to the right.
		Leverage scores are then translated into a 10-point scale and charted to indicate “bang for the buck”.
	www.blm.gov /nhp/NPR/conversations/rec/tsld036.htm (142 words)

	The Third Form of Leverage
		Leverage, in its simplest sense, is the substitution of a fixed quantity for a variable quantity.
		For example, operating leverage is the extent to which a company's costs of operating are fixed (rent, equipment cost) as opposed to variable (material, direct labor).
		Software leverage is the extant to which a company utilizes existing software in the development of new software.
	homepage.mac.com /sneiderhauser/leverage.html (709 words)

	Leverage (Site not responding. Last check: 2007-11-05)
		Leveraged income does not depend on how many working hours there are in the day.
		In the majority of companies, the owner is the only member of the firm with the leverage for sizeable income (the employees are often paid at a level just sufficient to induce them to stay).
		It could be said that an investor in mutual funds leverages the efforts of fund managers, and the resources of co-investors in the fund, to earn a return without effort once the fund selection is made.
	www.ncf.carleton.ca /~aj624/leverage.html (606 words)

	RefcoPCG™: Commodity Futures Trading Education: LindForum, Issue 310
		Leverage is what makes trading futures one of the most exhilarating and emotional experiences you'll ever have.
		Leverage is the use of credit to enhance your speculative capacity and is one of the principal attributes that makes futures trading so appealing to many traders.
		By controlling the amount of leverage, you are essentially adjusting your level of market exposure, as stated as a percentage of your account balance.
	www.lind-waldock.com /edu/newsletter/310/nl_310_art03.shtml (1251 words)

	Leverage as supplied by EagleTraders.com
		Leverage is used to explain a firm’s ability to use fixed-cost assets or funds to magnify the returns to its owners.
		Financial leverage is often referred to as “trading on the equity.” Operating leverage is based on the relationship between a firm’s sales revenue and its earnings before interest and taxes.
		Total leverage reflects the impact of operating and financial leverage on the total risk of the firm (the degree of uncertainty associated with the firm’s ability to cover its fixed-payment obligations).
	www.eagletraders.com /advice/securities/leverage.htm (1079 words)

	Leverage 5 (Site not responding. Last check: 2007-11-05)
		The fact is leverage is a double edged sword: it makes the good times really good, and the bad times unbearable.
		The point is that leverage is magnifying all changes in value to the investor by a factor of 10 to 1.
		The logic that causes over leverage is that if a little bit of medicine is good for you, then 10 times as much medicine must be 10 times better.
	www.ghallabhansali.com /leverage5.htm (1826 words)

	MarkJoyner.name Discussion Community - What is YOUR definition of ' Leverage '
		For example, a basic definition of leverage is using a strong pole, and a correctly placed block to move a rock weighing a ton by myself.
		Leverage is a technique used to focus an amount of energy from a relatively large area into a smaller area, across a "leverage point" (or fulcrum), thereby increasing the intensity of output for a ceratin amount energy.
		Seems to me the principle of leverage is pretty much the same as the principle of focus, except that focusing energy is more like funneling energy towards a point, and leveraging seems to imply multiplying your energy across a greater area first, and then focusing it.
	www.markjoyner.name /forums/printthread.php?t=68 (1335 words)

	Leverage Technologies
		Leverage Technologies offers a variety of hosting plans with up to 200,000 MB (200.0 GB) of bandwidth per month.
		Leverage Technologies offers domain name registration as low as $4.99 per year.
		Leverage Technologies includes an optional Dedicated Hosting IP on each hosting plan, meaning the account has a unique IP address, not shared by any other account on the same server.
	www.leveragetech.com /tutorials.html (834 words)

	About LEVERAGE
		The consortium of LEVERAGE partners brought together a multi-disciplinary team of academics and industrialists from across Europe.
		The basis of LEVERAGE is that a learner in one country contacts a learner in another, and that they assist each other in the performance of a mutual task, alternately playing the role of tutor (own native language) and learner (second language).
		The first trial of the LEVERAGE system took place at the University of Cambridge between the Language Centre, Churchill College and the Language Unit of the Engineering Department during February and March 1997.
	greco.dit.upm.es /~leverage/about.htm (730 words)

	Leverage (Site not responding. Last check: 2007-11-05)
		Leverage is torque, a factor by which a small force can be amplified into a large one.
		But leverage is also used with more metaphorical meanings of the word force.
		For instance, in finance people think of money as "force." Given a relatively small initial amount of force (money), you can use that as collateral for a much larger loan, which gives you a larger amount of money (force) to throw around.
	www.theezine.net /l/leverage.html (232 words)

	Fool.com: Leverage [Return on Equity]
		Leverage is the answer -- heck, for many, leverage is the American way.
		The problem with adding leverage to a company's equity as a way to boost ROE is that after a certain point, the actual cost of the debt diminishes profit margins and decreases asset turns.
		There are almost as many ways to assess how much long-term debt a company has than there are mutual funds, but the five most common include the debt-to-assets ratio, the debt-to-equity ratio, the debt-to-total capital ratio, the debt-to-market capitalization ratio, and the debt-to-revenues ratio.
	www.fool.com /School/ReturnOnEquity/ReturnOnEquity04.htm (1218 words)

	TheStreet.com: Lessons of the Fall: Defenses Against Leverage Prove Less Than Convincing
		LTCM was leveraged 28-to-1 at the end of 1997, controlling $129 billion of assets with $4.7 billion of capital, according to a study of its collapse by the Treasury Department, the Fed, the SEC and the Commodity Futures Trading Commission released in April.
		The regulators' principal conclusion was that excessive leverage needs to be prevented, but they also conceded that leverage is a doozy to measure.
		Even "net economic leverage," the fourth-most-sophisticated method detailed, would rate as equally leveraged a fund with a single large position in an illiquid emerging-market equity, as one with a like amount of three-month Treasury bills, if both used 25% equity and 75% debt.
	www.thestreet.com /stocks/brokerages/787002.html (1201 words)

	Discussion: Operating and Financial Leverage (Site not responding. Last check: 2007-11-05)
		Both types of leverage are strategies that increase the potential profitability of the firm but also increase risk.
		Financial leverage is the use of debt financing to increase return on equity.
		Similarly, operating leverage is the use of automation (or other strategies which increase fixed cost) to reduce variable cost per unit and increase the contribution margin ratio.
	www.swcollege.com /accounting/students/cvp_reso6.htm (224 words)

	Trust Preferred Securities & Leverage (Site not responding. Last check: 2007-11-05)
		Because different leverage transactions involve varying degrees of risks, the overall leverage plan should document the impact on a bank’s net interest margin in a wide range of up and down scenarios prior to execution.
		Leverage models should project shareholder ROE over a multiyear timeframe so that any risks inherent in a leverage strategy can be identified.
		While a leverage of this type would in theory reduce the overall rate sensitivity of an institution, the timing of such a transaction may be less than optimal in the current rate environment.
	www.wib.org /wb_articles/cap_june02/tr-pref_june02.htm (811 words)

	Operating leverage - C1-45 August 2002
		Leverage involves stretching a limited resource to increase the returns from that resource.
		Traditional discussions of leverage focus on financial leverage where equity funds (net worth) are augmented with borrowed funds to increase the size of a business.
		Operating leverage increases the returns to limited equity funds by using them to control assets but not own them.
	www.extension.iastate.edu /agdm/wholefarm/html/c1-45.html (686 words)

	How leverage works (ASX)
		Leverage is one of the main reasons you would invest in warrants.
		Leverage can also be expressed in numerical terms, and represents the number of warrants (adjusted by the conversion ratio) that can be bought for the same price as one underlying share.
		The higher the number, the greater the leverage of a warrant.
	www.asx.com.au /investor/warrants/how/leverage.htm (374 words)

	TheStreet.com: The Motley Fulcrum: How Leverage Plays Out in Your Portfolio
		Leverage is any situation in which some measure of input has an enlarged effect on output.
		This magnitude of leverage can translate into a reduction of a bank's stock price of 5% to 7% for every 1% of decline in net interest margin.
		We underweight bank stocks in an environment of rising short-term rates (as we have seen over the last year), which compresses margins, and go back into that sector when short-term rates are stabilizing (as we see now) or falling (as we may see a year from now).
	www.thestreet.com /funds/managerstoolbox/999939.html (996 words)

	Boston.com / News / Boston Globe / Opinion / Op-ed / Democrats weigh leverage in Iraq pullout
		Albright said she is positive Kerry means what he says about a return to special envoys, the use of financial and diplomatic leverage on the Palestinian Authority to suppress terrorist groups, and constant pressure for progress.
		However, the Democrats' discussion of leverage is an example of their effort to sketch a different future where Iraq is concerned.
		At some point, the "leverage" of US withdrawal may have to become more than leverage; it may have to be a real option unless our leaders can do something to earn public support.
	www.boston.com /news/globe/editorial_opinion/oped/articles/2004/07/27/democrats_weigh_leverage_in_iraq_pullout (757 words)

	Best leverage - FXMessage
		This also explain why novices end up losing all the initial capital, either for lack of a strategy, of for a leverage that is not appropriate for the strategy used.
		Using a leverage of 20, you trade 20000$ and your profit is 400 $ and your loss is 300 $.
		You must take the leverage from the balance at the beginning of a trading period (day or week) for all trades.
	www.oanda.com /products/msgboard/ubb/Forum16/HTML/000970.html (1487 words)

	Partial Leverage Plots
		Partial leverage is used to measure the contribution of the individual independent variables to the leverage of each observation.
		Note that the partial leverage is the leverage of the ith point in the partial regression plot for the jth variable (enter HELP PARTIAL REGRESSION PLOT for details on the partial regression plot).
		The interpretation of the partial leverage plot is that data points with large partial leverage for an independent variable can exert undue influence on the selection of that variable in automatic regression model building procedures (e.g., the BEST CP command in Dataplot).
	www.itl.nist.gov /div898/software/dataplot/refman1/auxillar/partleve.htm (1304 words)

	Gold Stock Investing 101
		Leverage, in my opinion, is the single most important concept to understand when investing in any stock of any commodity-producing company.
		Leverage is very important to consider, but investment decisions should never be made based solely on it.
		This new leverage is diluted across all the rest of the other low-cost gold a given company already produces, but it can still be powerful.
	www.zealllc.com /2002/goldstk101.htm (4921 words)

	ARGIS MLM LEVERAGE (Site not responding. Last check: 2007-11-05)
		If you found 100 people poised and ready to give you just 1% of their time and effort, you yourself would eventually be in a position to only require 1% of your own effort to enjoy the same success as if you were giving 100% of your own efforts.
		If you are an expreienced network marketer, by now you will have noticed a "revolving door" syndrome in one or more of your business opportunities where just as many people are leaving your opportunity as you are bringing in.
		For high retention rates and proper leverage of your organization, a network marketer must either teach the new person the exact compensation plan and/or system or do the work of recruiting others for them.
	www.angelfire.com /pro/freedomsphere/argimll.html (858 words)

	HUI Leverage to Gold
		This waning HUI leverage to gold is particularly troubling because the sole reason to own gold stocks is to reap their legendary leverage to our bull market in gold.
		Upleg leverage in sequence from the low HUI days to the present ran 14.7x, 7.2x, 2.9x, and 5.5x, so even before today’s lackluster 2.4x the prevailing trend was generally down.
		Even if the HUI leverage to gold has to gradually decay as the base HUI rises higher and higher in each subsequent upleg/correction and makes like percentage gains harder and harder to achieve in the future, the HUI’s underperformance today is even worse than such a model would suggest.
	www.zealllc.com /2004/huilev.htm (3377 words)

	Leverage
		Leverage helps both the investor and the firm to invest or operate.
		If an investor uses leverage to make an investment and the investment moves against the investor, his or her loss is much greater amount than it would've been if the investment were not leveraged - leverage magnifies not only gains but also losses.
		In the business world, a company can use leverage to generate shareholder wealth, but if it is fails to do so, the interest expense and credit risk of default destroys shareholder value.
	www.investopedia.com /terms/l/leverage.asp (412 words)

	NYSE, New York Stock Exchange (Site not responding. Last check: 2007-11-05)
		For corporations, it refers to the ratio of debt (in the form of bonds and preferred stock outstanding) to equity (in the form of common stock outstanding) in the company's capital structure.
		Shareholders benefit from this financial leverage to the extent that the return on the borrowed money exceeds the interest costs of borrowing it.
		Because of this effect, financial leverage is popularly called "trading on the equity." For individuals, leverage can involve debt, as when an investor borrows money from his broker "on margin" and so is able to buy more stock than he otherwise could.
	www.nyse.com /glossary/1042235996518.html (200 words)

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