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What was financial leverage? Why did he read in novels that 100 billion yuan had reached 1 trillion yuan through financial leverage? Was the capital always multiplied by ten times?

2024-09-18 10:12
2024-09-18 14:58

Financial leverage refers to a method of using other people's funds to increase one's financial strength. It usually refers to borrowing or taking deposits to expand one's own pool of funds. Financial leverage could allow investors to increase the rate of return on investment by magnifying the use of funds. In the novel, 100 billion yuan reached 1 trillion yuan through financial leverage, probably because the author wanted to express a change in time. Through financial leverage, 100 billion yuan of funds could grow to 1 trillion yuan in a very short period of time, which was equivalent to ten times the capital. Of course, this was only a possibility, and it depended on the plot of the novel. Financial leverage wasn't always ten times the capital. It would change based on a variety of factors. For example, if the capital used for leverage was real and it received enough interest and returns, the capital might grow very quickly. However, if the capital used for leverage was fake or it could not obtain enough interest and returns, the growth rate of the capital might be very slow. Therefore, the influence of financial leverage depended on many factors.

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