How much leverage can I take investing only in exchange trade funds? Provide details, name...


How much leverage can I take investing only in exchange trade funds? Provide details, name options and gives specific leverage profiles?


Leverage is the use of borrowed money to improve the possible profits of a firm. Leverage could also be the total debt a company may use to finance assets. The use of leverage may get applied in business expansions or the generation of profits from risk.

Answer and Explanation: 1

The SPY ETF is tradable security aimed at maximizing its profits on 3:1 or 2:1, which is close to more than 100 % of returns. It uses debts and financial derivatives; the fund can perform the underlying index activities and mitigate risks from the high market fluctuations. Security index can get tracked on a 1 to 1 basis by the ETF, with a specification of the Standard and Poor's 500 index.

It has a high holding in ten top companies. Its profits are above average and more than any other blend fund in more than ten years, which is averagely 6.23% for three years, and averagely, 8.93 % annually, with a ratio of 0.095%. The fund offers investors sufficient diversity and exposure to both the United State's market and that of the world without investing in more stocks. It may also apply to investors who wish to take the average risk.

Financial Disclaimer: The information on this site is for academic purposes only and is not a substitute for professional financial advice.

Learn more about this topic:

What is a Leveraged ETF? - Decay, Risk & Volatility


Chapter 4 / Lesson 12

Leveraged ETFs are short-term trading vehicles that multiply the performance of their underlying index and can move wildly in any given trading session. Learn about leveraged ETFs and a few of the common risks associated with them.

Related to this Question

Explore our homework questions and answers library