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The use of debt financing, or property of rising or falling at a proportionally greater amount than comparable investments. For example, an option is said to have high leverage compared to the underlying stock because a given price change in the stock may result in a greater increase or decrease in the value of the option. Also, commonly known as Gearing in Europe.


1. To use debt to finance an activity. For example, one usually borrows money in the form of a mortgage to buy a house. One commonly speaks of this as leveraging the house. Likewise, one leverages when one uses a margin in order to purchase securities.

2. The amount of debt that has been used to finance activities. A company with much more debt than equity is generally called "highly leveraged." Too much leverage is thought to be unhealthy, but many firms use leverage in order to expand operations.


The use of fixed costs in order to increase the rate of return from an investment. One example of leverage is buying securities on margin. While leverage can operate to increase rates of return, it also increases the amount of risk inherent in an investment. See also financial leverage, operating leverage.


Leverage is an investment technique in which you use a small amount of your own money to make an investment of much larger value. In that way, leverage gives you significant financial power.

For example, if you borrow 90% of the cost of a home, you are using the leverage to buy a much more expensive property than you could have afforded by paying cash.

If you sell the property for more than you borrowed, the profit is entirely yours. The reverse is also true. If you sell at a loss, the amount you borrowed is still due and the entire loss is yours.

Buying stock on margin is a type of leverage, as is buying a futures or options contract.

Leveraging can be risky if the underlying instrument doesn't perform as you anticipate. At the very least, you may lose your investment principal plus any money you borrowed to make the purchase.

With some leveraged investments, you could be responsible for even larger losses if the value of the underlying product drops significantly.






The effect borrowed money has on an investment;the concept of borrowing money to buy an asset that will appreciate in value, so that the ultimate sale will return profits on the equity invested and on the borrowed funds.

Example: Mark and Amy each have $100,000 to invest. They can buy rental houses for $100,000 per house and collect rent of $1,100 per month for each house. At the end of 5 years, they will be able to liquidate and sell their houses for $150,000 each. Amy uses leverage and Mark does not.

References in periodicals archive ?
We've seen a couple of BLRs, but no other lever actions.
It is prayed to DG-FIA to initiate high-level probe against lever transplant mafia so that life of common people could be saved, the application concluded.
The victim also told the High Court in Edinburgh that Lever had engaged in a type of sexual activity she had not wanted and that "there was blood everywhere".
Food deliveries were dependently arranged in the levers (Stubbs and Pliskoff 1969), meaning that when a food pellet was scheduled in one lever, no further food pellets could be arranged in the other lever until that food pellet was obtained.
A total of four different wheelchair conditions were tested: lever propulsion with the Wijit (roller-lever), lever propulsion with the Willgo (spring-lever), hand rim propulsion with the Wijit detached (roller-hand), and hand rim propulsion with the Willgo (spring-hand).
Sandra Penketh from National Museums Liverpool, which owns the Lady Lever Art Gallery, said they were loaned five paintings from the Lever family's collection, three of which are now being sold at Sotheby's and have already been taken down.
In the pictures you'll see that the lever on the holster is farther down toward the bottom of the pistol than it should be and is just above where the magazine release is.
Lever eventually pleaded guilty to charges of indecent assault and committing an act of gross indecency with or towards a child.
Instead, press down on the hatch and push the lock lever toward the right side of the vehicle.
From the beginning of the self-contained cartridge era and for a century, the lever action dominated America's hunting fields.
Astoria is teaming up with three respected coffee guys out of Texas to bring you discover: lever, an exhibition featuring the lever machines unique pressure profile, plus a hands-on educational experience.