Question
Howard wants to buy a commercial building but does not have enough cash. He
decides to bring in partners to help fund the equity and provide them with a
return on their money. Howard's decision to use partners is an example of
what...? Illiquidity Leverage Scale
Answer & Explanation
Howard's decision to bring in partners to help fund the equity for purchasing a
commercial building is an example of "Leverage."
Explanation:
Leverage: In finance, leverage refers to the use of various financial
instruments or borrowed capital—in this case, equity from partners—to
increase the potential return on investment. By bringing in partners,
Howard is effectively leveraging their capital to make a purchase he
couldn't afford on his own.
Howard wants to buy a commercial building but does not have enough cash. He
decides to bring in partners to help fund the equity and provide them with a
return on their money. Howard's decision to use partners is an example of
what...? Illiquidity Leverage Scale
Answer & Explanation
Howard's decision to bring in partners to help fund the equity for purchasing a
commercial building is an example of "Leverage."
Explanation:
Leverage: In finance, leverage refers to the use of various financial
instruments or borrowed capital—in this case, equity from partners—to
increase the potential return on investment. By bringing in partners,
Howard is effectively leveraging their capital to make a purchase he
couldn't afford on his own.
