Leveraged return shows how borrowing amplifies the return on equity. In words, you earn the asset return on the whole position and pay the borrowing cost on the debt portion. Lightly: R_L = R_a + (B/E)(R_a − r_B), where B/E is the debt-to-equity financing mix. Leverage magnifies both gains and losses. A common trap is ignoring the borrowing rate or using the wrong leverage ratio.