Optimum Leverage Ratio

Definition:

The borrowing level that maximizes the value of the firm. The cost of capital to the firm is minimized at that same level.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Expected future return

The return that is expected to be earned on an asset in the future. Also called the expected return.

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