The use of borrowed money to amplify returns (and losses) on equity.
Related terms
- Loan covenant
A contractual condition in a loan agreement — such as a minimum DSCR or maximum LTV — that the borrower must maintain, with a breach triggering default remedie…
- Loan-to-cost (LTC)
The ratio of debt to total project cost, used in development finance.
- Loan-to-value (LTV)
The ratio of debt to property value; higher LTV means more leverage and risk.
- Mezzanine debt
Subordinated financing that sits between senior debt and equity, at a higher cost.
- Mortgage
A loan secured against real property, repaid over a set term.
- Mudaraba
A Sharia-compliant profit-sharing arrangement where one party provides capital and the other provides management, splitting profits by agreed ratio while the c…
- Murabaha
A Sharia-compliant financing where the bank buys an asset and resells it to the client at a disclosed cost-plus markup payable in instalments, substituting a f…
- Musharaka
A Sharia-compliant joint venture where partners contribute capital and share profits by agreement and losses in proportion to capital; a diminishing musharaka…