Question

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

Answer 1

Answer:

Explanation:

quickly experienced the loss of the 10% they held in the stock. The other 90% was absorbed by the banks who went belly up because they were stupid enough to cover the difference between what the stock was worth and the small amount the shareholder had put up.

We still have margin but you have to be awfully careful how you use it or awfully dumb. The best way to buy the stock is not to use margin at all, especially if you don't fully know what it is or what it can do. There are no free lunches in the stock market, and there is nothing that is 100% safe. Everything in the market is a risk.