Tuesday, November 15, 2011
Real Estate - is it leverage or not?
Does this include real estate?
Yes, real estate investing is a leveraged asset, but this isn't what the standards are referring to. Here we speak about things like options and margin accounts.
It therefore naturally follows that mortgage backed securities and asset backed securities are not leveraged assets, either! A verification client of ours was wrestling with this and fortunately called for clarity.
MBS and ABS in your portfolio? Fine; no need to disclose.