Buying securities on margin is risky because margin securities are investments in companies that are not performing well.

Question

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Buying securities on margin is risky because it involves borrowing money from a broker to purchase securities, which means that investors have to pay interest on the borrowed funds. If the value of the securities declines, investors may not be able to repay the loan, which can lead to margin calls and potentially result in the loss of their investment. However, whether or not margin securities are investments in companies that are not performing well depends on the individual securities purchased and is not necessarily a characteristic of all margin investments.

Buying Securities on Margin Is Risky Because Margin Securities Are