Buying on margin involves which?

Answer 1

Buying on margin involves borrowing funds from a broker to purchase securities, allowing investors to buy more shares than they could with just their own capital. This practice amplifies both potential gains and potential losses, as investors are responsible for repaying the borrowed amount regardless of the investment's performance. Additionally, margin accounts typically require a minimum equity level, and if the value of the securities falls below this threshold, investors may face a margin call, requiring them to deposit more funds or sell assets.