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If the stock price fell, the buyer still had to pay the balance owed.
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What was one danger of buying stock margin?
If the stock price fell, the buyer still had to pay the balance owed.
What was one major danger of buying stock of margin?
If the stock price fell, the buyer still had to pay the balance owed.
What was one major danger of buying on stock margin?
If the stock price fell, the buyer still had to pay the balance owed.
What does it mean to buy a stock on margin?
buying stock on margin is buying stock with money you dont have. in essence buying with credit. this is now illegal i believe as it was one of the culprits behind the great depression
What was one major danger of buying stock on the margin?
One major danger of buying stock on margin is the potential for significant financial loss. If the value of the purchased stock declines, investors are still responsible for repaying the borrowed funds, which can lead to substantial debt. Additionally, a margin call can occur, requiring investors to deposit more money or sell assets at a loss to cover the loan, amplifying the risk involved in margin trading. This leverage can result in both higher profits and devastating losses, making it a risky investment strategy.
What was one major of buying stock on margin?
If the stock price fell, the buyer still had to pay the balance owed.
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.
Why did people buy stocks on the margin in the 1920s?
Same reason they do today....leverage. Buying say $1,000 of stock that you believe is going up...and it does say 20% earns you $200. On margin, the same $1,000 may get you 3 times as much stock, so the same events makes you $600 - or 60%, (minus a small interest and carrying expense). The numbers aren't quite right, but the theory is. The SEC won't allow you to borrow more than half the purchase price of the stock you're buying on margin. If you have a margin account with a $5000 maintenance margin (the amount of money you MUST leave in the account) and you have $15,000 in there, you have $10,000 of usable cash. You may then borrow up to $10,000 on margin. The reason for this rule is, of course, because buying stock on margin is one of the major factors in the Great Depression.
When one purchases stock with a small down payment and borrows the rest of the purchase price this is called?
When one purchases stock with a small down payment and borrows the rest of the purchase price, this is called buying on margin. This strategy allows investors to leverage their investments, potentially amplifying both gains and losses. However, it also comes with increased risk, as investors may face margin calls if the value of the stock declines significantly.
What does it mean to buy on margin?
Margin means you're borrowing money to buy stock. It's also one of the few ways you can lose more in the stock market than you invested in the first place.
Probably the one single cause of the Stock Market crash was the lack of a?
margin requirement
What does it mean to buy stocks on margin?
Margin means you're borrowing money to buy stock. It's also one of the few ways you can lose more in the stock market than you invested in the first place.
