Glossary
Definition
Debt
Money borrowed by a company or individual that must be repaid with interest.
Debt refers to borrowed money that must be repaid over time, typically with interest. For corporations, debt includes bonds, bank loans, and other liabilities. Debt can amplify returns (leverage) but also increases financial risk. A company's 'debt-to-equity ratio' compares its total debt to shareholder equity, indicating financial leverage.
Frequently Asked Questions
Can a billionaire have significant personal debt?
Yes. Some billionaires borrow against their equity stakes to fund lifestyle or other investments, often at very low interest rates using shares as collateral. This allows them to avoid selling shares (and triggering capital gains taxes) while still accessing liquidity.