Direxion Daily 20 25466AAE1 Bond

TMV Etf  USD 34.15  0.93  2.80%   
Direxion Daily's financial leverage is the degree to which the firm utilizes its fixed-income securities and uses equity to finance projects. Companies with high leverage are usually considered to be at financial risk. Direxion Daily's financial risk is the risk to Direxion Daily stockholders that is caused by an increase in debt. In other words, with a high degree of financial leverage come high-interest payments, which usually reduce Earnings Per Share (EPS).
  
Check out the analysis of Direxion Daily Fundamentals Over Time.
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Given the importance of Direxion Daily's capital structure, the first step in the capital decision process is for the management of Direxion Daily to decide how much external capital it will need to raise to operate in a sustainable way. Once the amount of financing is determined, management needs to examine the financial markets to determine the terms in which the company can boost capital. This move is crucial to the process because the market environment may reduce the ability of Direxion Daily 20 to issue bonds at a reasonable cost.
Popular NameDirexion Daily US25466AAE10
Equity ISIN CodeUS25460G8490
Bond Issue ISIN CodeUS25466AAE10
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Direxion Daily 20 Outstanding Bond Obligations

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DIS 77 30 OCT 25US254687DF03Details
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Dana 575 percentUS235822AB96Details
Volcan Compania MineraUSP98047AC08Details
DISNEY WALT NEWUS25468PBW59Details
Boeing Co 2196US097023DG73Details
DIRECTV HLDGS LLCUS25460CAA18Details
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WALT DISNEY COUS254687EH59Details
DISNEY WALT NEWUS25468PDV58Details
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DISNEY WALT NEWUS25468PDN33Details
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US254687DK97US254687DK97Details
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DISNEY WALT NEWUS25468PCX24Details
DIS 73 30 APR 28US254687DP84Details
US25466AAJ07US25466AAJ07Details
US25466AAE10US25466AAE10Details
US25466AAR23US25466AAR23Details
DISCOVER BK NEWUS25466AAP66Details
US25466AAN19US25466AAN19Details
WALT DISNEY COUS254687FX90Details
WALT DISNEY COUS254687FY73Details
WALT DISNEY COUS254687FZ49Details
WALT DISNEY COUS254687GA88Details
US254687FP66US254687FP66Details
WALT DISNEY COUS254687FQ40Details
WALT DISNEY COUS254687FR23Details
WALT DISNEY COUS254687FS06Details
The Walt DisneyUS254687FV35Details
WALT DISNEY COUS254687FW18Details
MPLX LP 4875US55336VAG59Details
MPLX LP 4125US55336VAK61Details
MPLX LP 52US55336VAL45Details
US25461LAA08US25461LAA08Details
Morgan Stanley 3591US61744YAK47Details
Morgan Stanley 3971US61744YAL20Details
MGM Resorts InternationalUS552953CD18Details

Understaning Direxion Daily Use of Financial Leverage

Understanding the structure of Direxion Daily's debt obligations provides insight if it is worth investing in it. Financial leverage can amplify the potential profits to Direxion Daily's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its cost of debt.
The fund, under normal circumstances, invests in swap agreements, futures contracts, short positions or other financial instruments that, in combination, provide inverse or short leveraged exposure to the index equal to at least 80 percent of the funds net assets . 20 Year is traded on NYSEARCA Exchange in the United States.
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When determining whether Direxion Daily 20 is a strong investment it is important to analyze Direxion Daily's competitive position within its industry, examining market share, product or service uniqueness, and competitive advantages. Beyond financials and market position, potential investors should also consider broader economic conditions, industry trends, and any regulatory or geopolitical factors that may impact Direxion Daily's future performance. For an informed investment choice regarding Direxion Etf, refer to the following important reports:
Check out the analysis of Direxion Daily Fundamentals Over Time.
You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
The market value of Direxion Daily 20 is measured differently than its book value, which is the value of Direxion that is recorded on the company's balance sheet. Investors also form their own opinion of Direxion Daily's value that differs from its market value or its book value, called intrinsic value, which is Direxion Daily's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Direxion Daily's market value can be influenced by many factors that don't directly affect Direxion Daily's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Direxion Daily's value and its price as these two are different measures arrived at by different means. Investors typically determine if Direxion Daily is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Direxion Daily's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.

What is Financial Leverage?

Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In most cases, the debt provider will limit how much risk it is ready to take and indicate a limit on the extent of the leverage it will allow. In the case of asset-backed lending, the financial provider uses the assets as collateral until the borrower repays the loan. In the case of a cash flow loan, the general creditworthiness of the company is used to back the loan. The concept of leverage is common in the business world. It is mostly used to boost the returns on equity capital of a company, especially when the business is unable to increase its operating efficiency and returns on total investment. Because earnings on borrowing are higher than the interest payable on debt, the company's total earnings will increase, ultimately boosting stockholders' profits.

Leverage and Capital Costs

The debt to equity ratio plays a role in the working average cost of capital (WACC). The overall interest on debt represents the break-even point that must be obtained to profitability in a given venture. Thus, WACC is essentially the average interest an organization owes on the capital it has borrowed for leverage. Let's say equity represents 60% of borrowed capital, and debt is 40%. This results in a financial leverage calculation of 40/60, or 0.6667. The organization owes 10% on all equity and 5% on all debt. That means that the weighted average cost of capital is (.4)(5) + (.6)(10) - or 8%. For every $10,000 borrowed, this organization will owe $800 in interest. Profit must be higher than 8% on the project to offset the cost of interest and justify this leverage.

Benefits of Financial Leverage

Leverage provides the following benefits for companies:
  • Leverage is an essential tool a company's management can use to make the best financing and investment decisions.
  • It provides a variety of financing sources by which the firm can achieve its target earnings.
  • Leverage is also an essential technique in investing as it helps companies set a threshold for the expansion of business operations. For example, it can be used to recommend restrictions on business expansion once the projected return on additional investment is lower than the cost of debt.
By borrowing funds, the firm incurs a debt that must be paid. But, this debt is paid in small installments over a relatively long period of time. This frees funds for more immediate use in the stock market. For example, suppose a company can afford a new factory but will be left with negligible free cash. In that case, it may be better to finance the factory and spend the cash on hand on inputs, labor, or even hold a significant portion as a reserve against unforeseen circumstances.

The Risk of Financial Leverage

The most obvious and apparent risk of leverage is that if price changes unexpectedly, the leveraged position can lead to severe losses. For example, imagine a hedge fund seeded by $50 worth of investor money. The hedge fund borrows another $50 and buys an asset worth $100, leading to a leverage ratio of 2:1. For the investor, this is neither good nor bad -- until the asset price changes. If the asset price goes up 10 percent, the investor earns $10 on $50 of capital, a net gain of 20 percent, and is very pleased with the increased gains from the leverage. However, if the asset price crashes unexpectedly, say by 30 percent, the investor loses $30 on $50 of capital, suffering a 60 percent loss. In other words, the effect of leverage is to increase the volatility of returns and increase the effects of a price change on the asset to the bottom line while increasing the chance for profit as well.