The situation in which the return on the investment purchased with borrowed money is less than the interest on the money borrowed. This happens when the cost of borrowing money (i.e., the interest payments) is greater than the return on the investment. Also called reverse leverage.
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Definition of negative leverage: The situation in which the return on the investment purchased with borrowed money is less than the interest on the money ...
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leverage, negative or positive. Negative leverage occurs when the cost of borrowing money is greater than the return a party makes on an equity investment.
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Learn how positive leverage, neutral leverage, or negative leverage can impact the yield a real estate investor collects as a result of financial leverage.
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Oct 21, 2009 ... Negative leverage occurs when the unlevered IRR is less than the interest rate paid on the debt. Returns and losses are magnified by the ...
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be positive when asset prices increase since the negative leverage ratio is applied to a negative initial net worth figure. This is illustrated in the example below.
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