Enter the current value of the leveraged position ($) and the initial amount invested before leverage ($) into the Return on Leverage Calculator. The calculator will evaluate and display the Return on Leverage.
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Return on Leverage Formula
The following formula is used to calculate the Return on Leverage.
ROL =(CV - IBL) / IBL * 100
- Where ROL is the Return on Leverage (%)
- CV is the current value of the leveraged position ($)
- IBL is the initial amount invested before leverage ($)
To calculate the return on leverage subtract the initial amount invested before leverage from the current value of the leveraged position, then divide by the initial investment amount.
How to Calculate Return on Leverage?
The following example problems outline how to calculate Return on Leverage.
Example Problem #1:
- First, determine the current value of the leveraged position ($).
- The current value of leveraged position ($) is given as: 4,000.
- Next, determine the initial amount invested before leverage ($).
- The initial amount invested before leverage ($) is provided as: 2,000.
- Finally, calculate the Return on Leverage using the equation above:
ROL =(CV – IBL) / IBL * 100
The values given above are inserted into the equation below and the solution is calculated:
ROL =(4,000 – 2,000) / 2,000 * 100 = 100.00 (%)
Example Problem #2:
For this problem, the variables needed are provided below:
current value of leveraged position ($) = 6,000
initial amount invested before leverage ($) = 1,000
This example problem is a test of your knowledge on the subject. Use the calculator above to check your answer.
ROL =(CV – IBL) / IBL * 100 = ?
