1. What is leverage? 2. What are the two major types of leverage? Define each. 3. When does it make the most sense to have high leverage? 4. Assume that you can invest $50,000 for one year in a project that is expected to have a 20% profit. You can borrow money at a 12% interest rate. If you borrow $40,000 and invest $10,000 of your own money, what your rate of return be if things go as expected? 5. Considering the information in question 4 above, what would be your rate of return on your investment if the project winds up with a 15% loss instead of a 20% profit? will 6. What is the rule of OPM? 7. If you have a choice of leasing a machine that you can return after each month, or buying the machine, if you buy it, that would be an example of what type of leverage