How did buying on margin work?

Answer 1

Buying on margin- they paid a small part of a stock's price as a down payment and borrowed the rest.

Answer 2

Buying on margin allowed investors to borrow money from their broker to purchase stocks. This meant they only had to provide a percentage of the total cost of the stock as collateral, while the broker would lend them the rest. The investor would then pay interest on the borrowed amount. If the stock price increased, the investor could sell the stock and repay the loan with the profits. However, if the stock price decreased, the broker could issue a margin call, requiring the investor to deposit more funds to cover the loss.