Assume You Purchase a Stock on Margin, and Compare Your

question 100

Multiple Choice

Assume you purchase a stock on margin, and compare your returns with a cash purchase. If the stock return is positive, the effect of margin will make your return _____ than if you had purchased the stock with cash. If the stock return is negative, the effect of margin will make your return _____ than if you had purchased the stock with cash.

• A) lower; lower
• B) lower; higher
• C) higher; higher
• D) higher; lower
• E) insufficient information

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Definitions:

True Population Mean

The average value of a characteristic within an entire population, often unknown and estimated through samples.

Off-Campus

Pertaining to activities, housing, or locations that are not situated within the main area or boundaries of a university or college.

Student's T Distribution

A distribution of probability that emerges in the distribution of sampling for sample averages, particularly valuable when dealing with small sample sizes and when the variance of the population is not known.

Normally Distributed Population

A type of population in which the variable of interest follows a bell curve, where most outcomes are near the mean, and extreme outcomes are rare.