ما معنى Leverage؟

Example 6.3 (The fund of the opening paragraph)

$A = \$5$ billion, $E = \$1$ billion, $L = 5$. With $r_f = 4\%$, a $+10\%$ year on the assets is $+34\%$ on the equity; a $-10\%$ year is $-66\%$. A fall of 20% ends the fund. After a fall of 4% the fund has lost $200 million, a fifth of its equity, and must sell $4 \times 0.04 \times 5 = \$0.8$ billion to be five times leveraged again: four dollars of selling for each dollar lost.

Example 6.15 (Archegos)

In March 2021 a family office, Archegos Capital Management, defaulted on margin calls from its dealers. It had built concentrated positions in a handful of stocks through total return swaps with several banks, positions which the SEC’s complaint later put at $36 billion. One of those banks, Credit Suisse, lost close to $5.5 billion. The report its board commissioned found that the bank had agreed to a swap margin of 7.5% — leverage above thirteen — that the margin was static, fixed on the price at which each swap was opened, so that as the stocks rose the average margin held fell to 6.9% of current value, and that a move to dynamic margining had not been given priority. When the stocks fell, every dealer held the same shares as its hedge, and each had to sell them into the others’ selling.