Reading 30, return on equity return, question, invested, concepts, different

Mechanic

Not sure if this has been discussed. I have a question on leverage effect in fixed income. vol 4, page 108.
It says “Re=return on equity.”
“Re equals the return on funds invested.”
This look not intuitive to me, and it’s different what’s in schweser, I think.
Can you clarify it? Q29 on 156 uses this concepts. Thanks.

OmarAdnan

This is just trying to separate “Portfolio return” into:
(i) the return by just investing your funds; the “return on equity”
(ii) the return on borrowing less the cost of borrowing; the “borrowed component”
(i) + (ii) is the “Portfolio return”
Think attribution.

brain_wash_your

You can source a project using 2 sources: invested capital using your own equity or by borrowing.
Re is the return on the capital you (and partners) have invested in the project.
I don’t use Schweser, but if it conflicted with the CFA readings then I would go with what CFA says.