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Leveraged Equity

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Leveraged equity
Stock in a firm that relies on financial leverage. Holders of leveraged equity experience the benefits and costs of using debt.

Leveraged Equity
Stock in a publicly-traded company with a significant amount of debt. Leveraged equity carries the same risk as debt; that is, the company must service the debt to remain out of bankruptcy. On the other hand, leveraged equity can increase returns for shareholders when the cost of capital of debt is low.


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In Table 1, the figures shown for Free & Clear Cash Flows After Fees assume no debt financing, while the figures for Leveraged Equity Cash Flows After Fees assume debt financing.
Addressing the Problems with Stock Options: Excessive Risk Exposure Executives face considerable risk exposure due to the concentration of their individual wealth tied to a leveraged equity instrument denominated in a single security.
Their credit quality is also being pressured by an increasing strategic focus on long-term lending and investment activities, which is not being balanced by a commensurate build-up of their highly leveraged equity bases,'' said Takahiro Saimen, an analyst at S&P.
 
 
 
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