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The Misadventures of Daring Dave: Leverage and Investment Returns
Schill, Michael J. Case F-1686 / Published January 23, 2013
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Product Overview

This case considers the return and liquidity effects of leverage on investment returns for novice investor, Daring Dave, in a single equity security. Through a play-by-play description of Dave's investment experience over a single week, students are introduced to the mechanics of trading on margin, margin calls, and the value of liquidity for risky, levered positions.


Learning Objectives

1. Explore the mechanics of trading on margin, margin accounting, and margin calls. 2. Introduce students to the intuition for margin loan terms from the perspective of securities brokers. 3. Build appreciation for the importance of liquidity for risky leveraged positions.

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  • Overview

    This case considers the return and liquidity effects of leverage on investment returns for novice investor, Daring Dave, in a single equity security. Through a play-by-play description of Dave's investment experience over a single week, students are introduced to the mechanics of trading on margin, margin calls, and the value of liquidity for risky, levered positions.

  • Learning Objectives

    Learning Objectives

    1. Explore the mechanics of trading on margin, margin accounting, and margin calls. 2. Introduce students to the intuition for margin loan terms from the perspective of securities brokers. 3. Build appreciation for the importance of liquidity for risky leveraged positions.