Understanding Financial Leverage
Harvard Business Review
DECEMBER 10, 2012
"Leverage" is one of the more interesting and difficult concepts to fully grasp in all of finance, but it's important for anyone that borrows or plans to borrow money to understand. Combining the two suggests that the party which borrows has the leverage — they have the power and advantage over others. Yet many people jump into risky financial situations without considering the potential consequences. The second is that the asset underlying the leverage holds its value.