Impact of Leverage on Stock Price Volatility Reference to Automobile sector

Introduction Risks are generally defined by the unfavorable blow on profitability of numerous diverse sources of uncertainty. While the types and degree of risks an organization may be exposed to depend upon a number of factors such as its size, complexity business activities, volume etc. The basic premise of leverage in investment portfolios is to borrow at a cost of capital lower than the return at which the capital can be reinvested. Corporations use financial leverage to create flexibility, maintain access to capital markets, and buy back equity, and ultimately create shareholder value. The theoretical framework provides the foundation on which the whole research is based. In the theoretical framework, relationship between different variables is identified on which serve as a basis for the whole study. The theoretical framework is the pictorial representation of this relationship derived in the light of previous literature available; the study has considered Leverage as the independent variable and the Risk and Return as a dependent variable.

Authors Name: 
Dr. Ratna Sinha