Which one of the following statements is true regarding buying stock on margin?
A)When buying stock on margin,an investor borrows stock from the brokerage firm.
B)Usually,a bank arranges for the loan in a margin transaction.
C)Investors buy on margin because doing so offers them the potential to buy more stock and therefore earn larger returns.
D)The margin requirement is established by the New York Stock Exchange.
E)The current margin requirement is 25 percent.

Question

Quizplus · Accepted Answer

Buying on margin involves borrowing money from a broker to purchase stock, allowing investors to buy more shares than they could with their own funds alone. This amplifies potential returns (as well as potential losses).

Which One of the Following Statements Is True Regarding Buying