Debt Management and Leverage

Option contracts

Debt occurs when someone owes someone else something.

Usually the term debt relates to an amount of money that must be repaid over some time period.

The most well known example of debt is possibly a personal mortgage on your primary residence. In this instance you borrow a lump sum of money from a lender to buy a house. Then you owe the lender the lump sum plus any interest and fees that are charged over the term of the loan. The house is used as security for the loan, meaning that the lender has a right of recourse to the property in the event that you do not meet your loan repayment obligations.