Now, let’s take the example a step further. If the buyer in our automobile example was able to drive away from the dealership and immediately sell that car for $22,000, the buyer would pocket $2,000 in profit from a $2,000 investment, ignoring the interest expense. Mathematically speaking, that would be a 100% return on the buyer’s investment. By contrast, consider the case if the buyer has paid cash for the car, without taking out a loan, and then immediately sold the car for $22,000. With a $20,000 initial investment resulting in $2,000 profit, the buyer would have generated a 10% return on the investment. While a 10% return is certainly nice, it pales in comparison to the 100% return that could have been generated using leverage.
News 
Market Data 
Discover 
