Question

In the 1920's, the danger of buying stock on margin was that if the value of the stock dropped, borrowers _____.

Answer 1

I believe the answer is: had to make up the difference.

when you buy a stock on margin, you would technically borrowing money from the broker to buy stocks with current value price and would receive it in future stock value.

If the value of the stock increased in the future, you can cover the loan with percentage of the profit and receive the remaining. If the value fall, you had to make up for the difference.

Answer 2

In the 1920's, the danger of buying stock on margin was that if the value of the stock dropped, borrowers had to make up the difference. The answer to your question is A. I hope that this is the answer that you were looking for and it has helped you.