leverage

Examples of leverage in the following topics:

• Commodities and Other Futures

  • This growing trade caught the attention of regulators and members of Congress after some banks, securities firms, and wealthy individuals suffered big losses on financially distressed, highly leveraged funds that bought derivatives, and in some cases avoided regulatory scrutiny by registering outside the United States.

• Reasons for Trade

  • Political benefits: Countries can leverage trade to forge closer cultural and political bonds.

• Market Strategies

  • Buying stock on margin is one kind of leveraged trading.
  • Another way to leverage a relatively small outlay of cash is to buy "call" options to purchase a particular stock later at close to its current price.

• Causes of Banking Crises

  • This can create dramatic rises and falls (bubbles and crashes), which in turn can throw banks with poorly designed leverage into huge losses.
  • As noted above, banks often leverage themselves to capture gains despite extremely high risks (such as over-dependence on derivatives).

• How to Compare Economies Throughout History

  • As the names imply, the leveraging of natural resources (such as metals) were a critical step forward for trade.
  • During this time frame the Babylonians are credited with generating the first metric to measure economic value (i.e. currency), and standardizing trade through leveraging this metric.

• Consequences of Banking Crises

  • Banks coordinate and economy's savings and investment: the act of pooling money to capture higher returns for everyone while simultaneously funding business dependent upon leveraging debt and equity.

• National Security Argument

  • However, the opportunity cost of leveraging the ever-growing global markets make this an unattractive prospect if taken to any extreme, as the benefits of global trade rapidly offset the risk of economic dependency upon hostile nations.

• Impacts of Surpluses and Shortages on Market Equilibrium

  • This will prioritize who receives the good or service based upon their willingness and ability to pay a premium for the specific item in demand, leveraging those along the demand curve who are at higher levels with higher ability and willingness to pay.

• Individuals Respond to Incentives

  • Companies leverage incentives-based strategies to drive performance and optimize employee decision-making and behaviors through meaningful reward systems.

• Supply Reduction

  • In this scenario, the leveraging of the surplus in one country can benefit the other country via aid, and in turn correct the supply/demand equilibrium in the donating country to the desired level.