What Is the Purpose of a Margin Account and Using

question 257

Multiple Choice

What is the purpose of a margin account and using margin to purchase stocks?

• A)A margin account allows you to purchase stocks without using any of your own money.
• B)A margin account allows you to purchase more shares than you could afford to purchase using only your own money.
• C)Using margin to purchase more shares gives you the potential to earn a higher return on your investment.
• D)All of the above are correct.
• E)Only B and C are correct.

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Definitions:

Type I Error

The error made in statistical hypothesis testing when a true null hypothesis is incorrectly rejected, commonly referred to as a "false positive."

Type I Error

Type I error, often denoted as α, occurs when a true null hypothesis is incorrectly rejected, indicating a false positive finding in hypothesis testing.

Null Hypothesis

A statement suggesting that there is no significant difference or relationship between specified populations, any observed effect being due to sampling or experimental error.

Type I Error

The mistake of rejecting the null hypothesis when it is actually true, commonly referred to as a "false positive."