Leverage can be explained as the percentage of debt a business uses to finance the purchase of assets.

Question

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Leverage refers to the use of borrowed funds (debt) to finance the purchase of assets, with the expectation that the income or capital gain from the new assets will exceed the cost of borrowing. This can indeed be expressed as a percentage indicating the proportion of debt used in the asset financing structure.

Leverage Can Be Explained as the Percentage of Debt a Business