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To: LTK007 who wrote (29274)10/12/1999 10:15:00 PM
From: bobby beara  Respond to of 99985
 
Max, leverage is options, margin and other sophisticated financial instruments, which as we learned about LTCM last fall must be bailed out in times of financial panic.

what happens if the lender of last resort is not only tapped out, but leveraged also, in a market that has dried up.

bb



To: LTK007 who wrote (29274)10/12/1999 10:15:00 PM
From: HairBall  Read Replies (2) | Respond to of 99985
 
max90: I can't speak for bobby the beara...but leverage to me is taking you actual cash (capital) and expanding its buying power by using margin for instance...

Also buying options instead of the underlying issues. All these give one the potential to make more profit if one is right, but they always equally increase the risk.

Regards,
LG


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