Question

Why was stock bought on margin considered a risky investment?

 

A) Investors purchased the stocks with little cash down; if the price dropped the investor had to repay the loan.

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

C) Investors paid high-interest rates to buy these stocks; they needed a substantial return to make money.

D) If the value of the stock declined, brokerages were responsible for the loss.