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Money Leveraging - The act
of placing limited amounts of money to obtain the 'Use' of larger sums
of money for a limited or specified period of time.
Use 20% of a sum to obtain
100% of the money for a limited period of time.
Done on a bank-to-bank basis, but can be done through certain 'Traders'
for private or corporate use.
This is becoming more difficult
to do, and the number of banks that participate are diminishing each year.
depends on many factors, some of which are:
Ownership of the Money
- Corporate (public listed company) is Highly Preferred
Source of Money - clean,
clear, and non criminal origin
Where Funds are Held - Bank Rating as well as location (branch) of
is by owner or by an Agent, Security House, or Third Party Bank
Must be in US Dollars
Place Transaction Occurs
Transaction must be
on a Bank-to-Bank basis only
What is done with
'Cash' after leveraging
This is becoming a paramount
issue with banks. The preferred and acceptable method is to deposit a
portion of the leveraged funds with the honoring bank, usually not less
than 50% for a period of not less than six (6) months.
Leveraging is usually
done by Traders or by public held corporations.
Leveraging by individuals
is virtually impossible, and is highly questioned by banks and trading
houses throughout the world.
It is generally easier
to raise capital utilizing other methods.
Fluctuating World Market
Conditions set the pace and determine the trading (leveraging) value,
Often times other forms
of collateral such as a bank instrument or stocks will be needed by
the corporation, in addition to the 'Cash Funds', to do this type
of transaction, and make up the total face value needed to obtain
Example...20m cash for 100m leverage would require collateral of another
60 to 80m.
is needed for this type of transaction.
Recommended further reading:
The intelligent way to trade shares
Links to Financial Link Collections
High yield investment: Bank debentures trading