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Why was stock bought on margin considered a risky investment? A: Investors purchased the stocks with little cash down; if the price dropped the investor had to repay the loan. B: Stocks purchased on margin were often for companies that had little or no value. C: Investors paid high interest rates to buy these stocks; they needed a substantial return to make money. D: If the value of the stock declined, brokerages were responsible for the loss.

William Cain

in Business

1 answer

1 answer

Jessie Thompson on May 18, 2018

Stock bought on the margin considered as a risk investment because the investors purchased the shares with little money in cash; if the price has gone down, the investor had to repay the loan. In the investment the higher the risk, higher the return, it will be beneficial for investors but more risky.

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