English to Russian Marketing Finance (general) shares

Leverage effect

Although the use of the leverage effect increases the returns on invested capital, it also increases the loss potential. It cannot be guaranteed that the Company will be able to fulfil their loan obligations if they incur debts.

The risk of the leverage effect is connected to the borrowing of funds and other investment techniques. The creation of the leverage effect is a speculative technique, which exposes the Company to higher risk and increases the costs. The increases and decreases in value are substantially enlarged in the Company’s portfolio due to the leverage effect. For example, the leverage effect can cause greater fluctuations in the Company’s net asset value, or lead to the Company losing more than it invested. There can be no assurances that the Company shall achieve their investment objective. If the leverage effect is used, the net asset value and market value of the shares will fluctuate more, and the shareholder returns will tend to fluctuate depending on the changes to short- term interest rates on the lever. The Company shall pay any costs associated with the leverage effect (which are ultimately borne by the shareholders). Any reduction of the net asset value of the Company’s investments shall be entirely at the expense of the shareholders. Therefore, the leverage effect would lead to a higher decrease of the net asset value for shareholders if the market value of the Company’s portfolio were to decrease, than if the Company does were not use the lever.