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

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.

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