Liquidity Risk - Relevance to Actuaries [8]

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Bullet points include: Leverage, also known as ‘gearing’ involves any investment approach in which we: Start with £X, In effect borrow some additional sum £Y using some or all of £X as collateral, And then invest £(X+Y) rather than merely £X. Captures many mainstream activities, e.g. House purchases via use of mortgages, Public limited companies issuing both debt and equity, Venture capitalists raising debt against future revenue streams, Many financial products, e.g. Collateralised Debt Obligations (CDOs), SIVs, ...

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