THE GREAT DEPRESSION 1929 1940
THE GREAT DEPRESSION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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buying the stock for someone else
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purchasing the stock outside the regular stock exchange
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paying less than the market price of the stock
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borrowing money to help pay for the stock
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Detailed explanation-1: -"Margin” is borrowing money from your broker to buy a stock and using your investment as collateral. Investors generally use margin to increase their purchasing power so that they can own more stock without fully paying for it. But margin exposes investors to the potential for higher losses.
Detailed explanation-2: -What is buying on margin? An investor can buy securities using money borrowed from a brokerage firm (rather than paying for the securities in full). This is known as “buying on margin.” Buying on margin requires opening a margin account and depositing an initial amount of purchased securities.
Detailed explanation-3: -Buying on margin involves getting a loan from your brokerage and using the money from the loan to invest in more securities than you can buy with your available cash. Through margin buying, investors can amplify their returns-but only if their investments outperform the cost of the loan itself.
Detailed explanation-4: -Simply put, borrowing on margin means taking an interest bearing loan secured by securities you own in your brokerage account (the securities are pledged as collateral for the loan).
Detailed explanation-5: -FINANCE Margin trading means buying stocks with borrowed funds-it’s riskier than paying cash, but the returns can be greater.