When an investor trades on margin,he or she borrows from the broker some of the funds needed to purchase securities.

Question

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When an investor trades on margin, they borrow some of the funds needed to purchase securities from their broker. The borrowed funds are collateralized by the investor's own securities or cash. Trading on margin allows investors to potentially increase their returns, but it also increases the risk of losses.

When an Investor Trades on Margin,he or She Borrows from the Broker