Leverage results from using borrowed capital as a funding source when investing to expand the firm’s asset base and generate returns on risk capital. The result is to multiply the potential returns from a project. At the same time, leverage alavancagem Forex also multiply the potential downside risk in case the investment does not pan out. The concept of leverage is used by both investors and companies.
Investors who are not comfortable using leverage directly have a variety of ways to access leverage indirectly. They can invest in companies that use leverage in the normal course of their business to finance or expand operations — without increasing their outlay. Investors use leverage to multiply their buying power in the market. Companies use leverage to finance their assets: instead of issuing stock to raise capital, companies can use debt to invest in business operations in an attempt to increase shareholder value.