Why was stock bought on margin considered a risky investment

Asked by maham237 @ 08/06/2021 in History viewed by 340 People

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

Answered by maham237 @ 08/06/2021

Stocks bought on margin are considered risky investments because these stocks are purchased with a loan and therefore, require a higher return in order for the holder to make money and repay the loan that was taken. Also if the stocks were to lose money then the stockholder would lose a great deal of money in attempting to repay the loan.

Buying on margin is a risky way to purchase stocks

Asked by admin @ 26/11/2021 in History viewed by 236 persons

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. …

Why are bonds less risky than stocks

Asked by maham237 @ 23/02/2021 in Business viewed by 406 persons

Why is an investment portfolio containing a mix of stocks and bonds less risky than one containing a single asset class? A. Because stocks and bonds are negatively correlated. B. …

Why is it risky to invest in a commodity quizlet

Asked by admin @ 22/11/2021 in Social Studies viewed by 281 persons

Why is it risky to invest in a commodity? A commodity has little or no value as a long-term investment. Commodity stocks cannot be traded after you purchase them. The …

The equity method of accounting for investments in common stock

Asked by admin @ 16/11/2021 in Business viewed by 280 persons

When an investor uses the equity method to account for investments in common stock, the investor's share of cash dividends from the investee should be recorded asA deduction from the …

Three weeks ago john bought stock at 49 1 4

Asked by admin @ 07/10/2021 in Mathematics viewed by 339 persons

Three weeks ago John bought stock at 49 1/4; today the stock is valued at 49 7/8. We could say the stock is performing at which of the following? A. …

Why is education and or job training considered an investment

Asked by maham237 @ 01/07/2021 in English viewed by 314 persons

A.) It costs thousands of dollars to go to school or to receive job training. B.) Higher-paying occupations are becoming obsolete. C.) Wage-earning potential, job promotions, and job security increase. …

A is invested by managers in a diversity of stocks

Asked by maham237 @ 27/04/2021 in Mathematics viewed by 393 persons

bonds, and other securities. A. series EE bond B. preferred stock C. mutual fund D. promissory note

What is considered a diversified investment

Asked by maham237 @ 07/01/2021 in Business viewed by 260 persons

Which of the following is considered a "diversified" investment? A. Mutual Fund B. Index Fund C. Both of these D. Neither of these

Why is the consumption of dietary supplements considered risky

Asked by maham237 @ 25/12/2020 in Health viewed by 283 persons

why is the consumption of dietary supplements considered risky? because they are not officially tested by the government for effectiveness because manufacturers label them as natural but put harmful substances …

Which of the following is considered a "diversified" investment?

Asked by maham237 @ 29/11/2020 in Social Studies viewed by 287 persons

Stock investments to be sold in 7 months balance sheet

Asked by admin @ 03/12/2021 in Business viewed by 346 persons

Classify each of the following financial statement items taken from Ming Corporation’s balance sheet. Classify each of the following financial statement Stockholders’ EquityLong-term InvestmentsCurrent AssetsIntangible AssetsLong-term LiabilitiesCurrent LiabilitiesProperty, Plant, and …

Write two paragraphs to compare and contrast the narrators’ schools and explain how their schools shape their perspectives toward the hijab. cite evidence from the text to support your ideas.

Asked by evette57 @ 13/09/2022 in History viewed by 1697 persons

Why was stock bought on margin considered a risky investment

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