Answered

Discover a wealth of knowledge and get your questions answered at IDNLearn.com. Ask your questions and receive comprehensive, trustworthy responses from our dedicated team of experts.

Why was stock bought on margin considered a risky investment? Investors purchased the stocks with little cash down; if the price dropped the investor had to repay the loan. Stocks purchased on margin were often for companies that had little or no value. Investors paid high interest rates to buy these stocks; they needed a substantial return to make money. If the value of the stock declined, brokerages were responsible for the loss.

Sagot :

Gibbsidn
Stocks bought on margin are considered risky investments because these stocks are purchased with a loan and therefore, require a higher return in order for the holder to make money and repay the loan that was taken. Also if the stocks were to lose money then the stockholder would lose a great deal of money in attempting to repay the loan. 

Answer:

Stocks purchased on margin were often for companies that little or no value.

Explanation:

We appreciate your presence here. Keep sharing knowledge and helping others find the answers they need. This community is the perfect place to learn together. For dependable and accurate answers, visit IDNLearn.com. Thanks for visiting, and see you next time for more helpful information.