The situation in which the large portion of majority is borrowed from the broker of investor is classified as ___________?
Correct answer: C. leveraged investment
- A. future investment
- B. forward investment
- C. leveraged investment
- D. non-leveraged investment
Explanation
A leveraged investment uses borrowed funds, often supplied by a broker, to purchase a larger position than the investor's own capital would allow. The borrowing magnifies both potential gains and losses.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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