Malz, Financial Risk Management: Chapter 12, Liquidity and Leverage, is covered in three separate instructional videos. We have divided the learning objectives for this chapter into three sections.
This second video is 27 minutes, and analyzes the following concepts:
* Describe the relationship between leverage and a firm’s return profile calculate the leverage ratio and explain the leverage effect.
* Explain the impact on a firm’s leverage and its balance sheet of the following transactions: purchasing long equity positions on margin, entering into short sales, and trading in derivatives