Buying Stock on Margin​

question 9

Multiple Choice

Buying stock on margin​
1) is an example of financial leverage
2) is buying stock with borrowed funds
3) requires leaving the stock with the broker

• A)​1 and 2
• B)​1 and 3
• C)​2 and 3
• D)​all three

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Definitions:

Traditional Markets

Markets that refer to established financial exchange venues and systems where stocks, bonds, and other securities are traded.

Initial Margin

This refers to the minimum amount of capital required to enter into a position in the securities or futures market, serving as a deposit to cover potential losses.

Common Stock

A form of corporate equity ownership, a type of security representing an ownership share in a corporation, giving holders voting rights and a share in the company's profits through dividends and the appreciation of stock value.

Rate of Return

A financial return or shortfall on an investment, indicated as a percentage of its initial value.