Abstract
Margin trading and financial leverage are typically taught separately from each other. In this study, we present a pedagogical approach with a dual focus on margin trading and financial leverage. We borrow the insights and tools from financial leverage in a corporate setting and apply them to margin trading as a special case of financing an investment using debt and equity. In addition to producing a simple and intuitive formula for performance calculations on a margin trade, our approach offers the benefit of improving students' understanding of how margin trading and financial leverage operate in general.
Recommended Citation
(2026)
"Teaching Margin Trading and Financial Leverage Together,"
Journal of Economics and Finance Education: Vol. 21:
Iss.
2, Article 8.
Available at:
https://scholarship.rollins.edu/jefe/vol21/iss2/8
