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Financial leverage

Financial leverage consists of using a debt mechanism to increase the amount of money available for investment.

Financial leverage makes it possible to acquire holdings without having to pay off the entire investment. This accelerates profits as well as losses.

Examples of financial leverage operations are warrants or CFDs where investors only pay for part of the asset they are going to buy. This causes profits and losses to multiply.

Real estate investment through a mortgage is another example of a leveraged transaction.