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Leveraged Meaning: Definition, Examples, and Translations

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leveraged

[หˆlษ›vษ™rษชdส’d ]

Definition

Context #1 | Adjective

financial context

Leveraged refers to the use of various financial instruments or borrowed capitalโ€”in other words, debtโ€”to increase the potential return of an investment. This term is often used in the context of finance and investing, where it indicates that the investment has been funded in part by borrowing. Higher leverage can amplify both potential gains and potential losses. In business, leveraged operations can mean using leverage to optimize asset utilization, resulting in increased profit margins. However, excessive leverage can lead to higher risk, and a company should balance its leverage to avoid financial distress.

Synonyms

debt-using, financed, geared.

Examples of usage

  • The company used leveraged buyouts to acquire its competitor.
  • Investors often seek leveraged investments to maximize their returns.
  • A leveraged position can result in substantial losses if the market moves against you.

Translations

To see the translation, please select a language from the options available.

Origin of 'leveraged'

The term 'leverage' originated from the late Latin word 'levare,' meaning 'to raise or lift.' The modern usage of 'leverage' began in the context of mechanics, referring to the mechanical advantage gained through the use of a lever in the early 19th century. Over time, especially in the early to mid-20th century, the term found its way into financial jargon, where it transitioned from its physical meaning to describe the financial strategy of using borrowed capital to increase the potential return on investment. This financial connotation became more prominent during the rapid growth of investment strategies and corporate finance, particularly in the 1980s and 1990s with the rise of leveraged buyouts. Now, 'leveraged' commonly pertains to any financial strategy utilizing debt, thus influencing modern business practices and investment strategies across various sectors.

Word Frequency Rank

Positioned at #20,775, this word is part of extensive vocabulary. It's relatively rare in general usage but may be important in specific fields or formal writing.