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Couldn't a threshhold level of debt usage be a line of delineation? Debt is a complex subject, but FASB has well-defined means to determine whether a security
by mediaman 17y ago
Couldn't a threshhold level of debt usage be a line of delineation?
Debt is a complex subject, but FASB has well-defined means to determine whether a security instrument is debt or equity.
- sachinag 17y agoYou can have leverage without debt through the use of options and other derivatives. The leverage is the systemic structural issue, not the notional amount of debt.
- mediaman 17y agoTrue, leverage comes in many forms. But what form of leverage could a VC firm engage in that they could not easily be restricted from in order to qualify for less onerous regulation? Restrictions on the use of derivatives is as easy to restrict as debt instruments.