Banking 10: Introduction to leverage (bad sound) | Forex
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What leverage is. Why it is is good or bad. Leverage and insolvency. More free lessons at: http://www.khanacademy.org/video?v=8fxilNdEQTo
Comments
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I actually liked the videos THANKS ! for making me listen this subject without killing myself
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Guess I'm dumb. I found it a bit unclear and confusing. I better watch again.
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Lol, does that say building?
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Thanks Sal! Great job!
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but if the loan holders can only pay 50 each out of the 300, wouldn't that impact they C.A some how? why would the C.A for those same loan holders still be counted as 600 (total) in liabilities even though they can only pay 50 of the loan?
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also, since there are millions of loans given out and paid back everyday, this problem pretty much arises from this example, where there is only one loan given out.
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the wonders of a banking system that doesn't need money that you can touch with your hands. if the borrower paid, say a contractor, with the money than the borrower would owe the bank 3000GP + interest and the bank would owe the contractor 3000GP. This like you said could create a liquidity problem, since the bank can't pay the contractor in GP before the borrower paid it back. But since the contractor knows that the bank is good for the money, he probably doesn't want the money physically.
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Really good video refreshing my memory ):
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This is prob a dumb question but, how is it a liability when you give someone a loan, it's not like you owe them money??? Could someone please explain this to me thnks
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Videos are great you are replacing my corporate finance teacher. New sound would be great though
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I like your video - subscribe to my channel and friend to have day trade videos
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Good one. Clear on leverage and debt to equity
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Good one.. clear on leverage and debt to equity..
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@missmitalik there is really no safe value for debt leverage. For example if the Federal Reserve calls in all loans like in the great depression, or it drastically decreased like in the GFC (huge mortgages) then there will be too much debts and not enough paper money floating around.
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@thehashcat debt equity ratio is good when you want to calculate the debt of a company or in this case a bank. It is used more realistically then A:E ratios because usually for a bank the debts are much higher then what they have in there equity, hence govt balilouts. D:E is also primarily used for calculations on stock/ options prices.
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@Luigi84289 nope they are actually created out of debt.
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@arseneremy lol what? how does printing currency increase bank assets?
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@nemnaisa so the solution is to fire up the printing presses and flood the market with currency. inflation nation is the U.S.'s answer to insolvency. SMH
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great work, well done!
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@nemnaisa you're brain is insolvent, and no reserve brain could ever bail you out