______, an investor is able to replicate a corporation's capital structure by borrowing funds and using those funds along with h

Question

Semenov [28]

1 year ago

6

______, an investor is able to replicate a corporation's capital structure by borrowing funds and using those funds along with h

er own money to buy the company's stock.

Business

1 answer:

Anika [276] · Answer 1 · 2023-10-26T18:09:01+03:00

With homemade leverage, an investor is able to replicate a corporation's capital structure by borrowing funds and using those funds along with her own money to buy the company's stock. This is further explained below.

<h3>What is homemade leverage?</h3>

Generally, When an investment in a firm that does not use leverage is converted into the impact that leverage has on investment by using personal borrowing, this is an example of homemade leverage.

In conclusion, By utilizing borrowed money plus her own finances to acquire shares in a firm, an investor might "do her own leverage," or mimic the capital structure of a publicly traded company.