Buying Stock on Margin Allows Investors to Increase the Potential

question 9

True/False

Buying stock on margin allows investors to increase the potential rate of return made on a stock investment.

---

Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed, varying based on income level, type of good, or service, among other factors.

Leverage

The use of various financial instruments or borrowed capital, such as debt, to increase the potential return of an investment.

Stock Price

The cost of purchasing a single share of a company, which fluctuates based on market conditions and investor perceptions.

EBIT

Earnings Before Interest and Taxes represents a company's profit, encompassing all revenues and costs apart from interest and taxes.