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.

Question

Quizplus · Accepted Answer

A margin account allows investors to borrow money from their brokerage firm to purchase stocks. By using margin, investors can purchase more shares than they could afford to with just their own money. However, using margin also increases the risk of loss and can result in the investor owing more money than they initially invested. Therefore, while using margin can potentially lead to higher returns, it also involves greater risk.

What Is the Purpose of a Margin Account and Using