Topic_3_E1 - Topic 3 Exercise 1 Trading Securities Margin...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Topic 3 Exercise 1 Trading Securities Margin Trading It is possible to use margin trading to increase the return and risk for investing in common stock. When you use margin trading, you are actually borrowing a portion of the investment from your brokerage firm. As long as the stock experiences a percentage return that is greater than the cost of borrowing, using leverage will enhance the returns from investment. Leverage will also increase losses if the stock does not experience a return percentage in excess of the rate at which you borrow the funds. The Securities and Exchange Commission has an education package that describes the use of leverage and allows you to calculate returns and likelihood of receiving margin calls. Using this resource, answer the following questions: 1. What is the maximum percentage amount that you can borrow using margin trading? What is the amount that you deposit referred to in margin lingo?
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

Topic_3_E1 - Topic 3 Exercise 1 Trading Securities Margin...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online