Which of these is(are) true? I. A leveraged account magnifies both gains and losses.
II) The risk of highly leveraged investments is that a small decrease in price can wipe out one's account.
III) Subprime mortgage packages were seen as low-risk investments, leading many investors to borrow money at the low prevailing interest rates to purchase greater quantities.

Question

Quizplus · Accepted Answer

Leveraged accounts increase both potential gains and losses (I). Highly leveraged investments can lead to significant losses with small price changes (II). Subprime mortgage packages were mistakenly considered low-risk, encouraging borrowing to invest more (III).

Which of These Is(are) True? I