Leverage

Magnifying returns through the use of debt. For example, assume you borrow $80 for an investment you buy for $100. If the total return on the underlying investment is 5% or $5, your return on your investment of $20 will be the full $5 which corresponds to 25%. The same magnification happens when returns are negative. A -5% return on an investment for which you borrow 80% will become -25%.