Some argue that it may be pointless for firms to try to use financial leverage to boost EPS because individual investors can, if they so desire, amplify the return they receive on their portfolio investments by using their own “homemade” leverage.


Research this point and report your findings. In particular, describe:


• How an individual investor would implement personal (homemade) financial leverage



• What conditions would have to be met for the investor's returns to be positively impacted by the technique



• Is there a particular name brokerage firms and investors use to designate the technique, and if so what is it?



• What are the possible dangers facing the investor in such a case?



• Briefly discuss any advantages or disadvantages you might identify in so shifting the risk represented by financial leverage from the firm to the investor

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