0
How is margin buying of stock similar to the mortgage crisis of today?
Wiki User
∙ 12y ago
Very similar... in both cases long-term investments (stock or real property) were purchased on borrowed money. In the events leading up to the Great Depression, many people were buying stock on margin because they assumed that they would very easily be able to pay off their debts. When the market crashed and many people found themselves out of work, all of a sudden those debts became unpayable which led to an even greater financial collapse.
In the case of the mortgage crisis, people were buying homes way beyond their means on credit. When the market crashed, once again many people found that they were unable to pay the large debts they took out, which led to many foreclosures and uncollectible debts by banks.
Wiki User
∙ 12y ago
Add your answer:
Earn +20 pts
What does buying on margin mean?
Buying on margin is borrowing money from a broker to purchase stock.
What was buying on margin in 1920's?
"Buying on Margin" meant that you would only have to put down a small percentage of money (10%) and the broker would cover the rest.
Is buying on margin still illegal?
Yes, buying on margin was made illegal buy the Trust-in-Sercurities Act before the Great Depression. This Act was one of the reasons the stock marketcrashed, as people could not pay money they did not have anymore.
What major event led to Great Depression?
Crash of an overbought, by use of margin buying, stock market
What is buying on margin?
its borrowing money to invest in the Stock Market
How is buying on margin similar to buying on an install.?
Margin is only offer on purchase of securities.
How is buying on margin similar to buying on an installment plans?
Margin is only offer on purchase of securities.
How is buying on margin similar to buying an installment plan?
Margin is only offer on purchase of securities.
How is buying on margin similar to buying on an installment plan?
Margin is only offer on purchase of securities.
Buying stock on margin and buying on the installment plan are similar in that both?
They are both forms of borrowing.
What does buying on margin mean?
Buying on margin is borrowing money from a broker to purchase stock.
What is the difference between buying on margin and margin call?
Buying on margin, taking a "margin" loan from the broker to help buy part of a stock purchaseMargin call, this happens when the broker demands full payment of your "margin" loan
What is buying on margin, and why is it a problem sometimes?
What is buying on margin, and why is it a problem sometimes? The biggest risk from buying on margin is that you can lose much more money than you initially invested.
1920 buying on credit was called buying on?
Buying on Margin
Explain why buying on margin can be a devastating thing?
Buying on margin can deplete a person's portfolio and can be a devastating thing.
What is another name for buying on credit?
buying on margin
What is buying stock on credit called?
Buying on margin.
