Problem 12.02 (Margins)\ eBook\ Explain how margin requirements can affect the potential return and risk from investing in a stock.\ I. Purchasing stock on margin not only increases the potential return from investing in a stock but also magnifies the potential losses.\ II. Purchasing stock on margin increases the potential return from investing in a stock, that results in a lower risk of investing.\ III. Purchasing stock on margin increases both the potential return and the potential losses from investing in a stock but does not have any impact on risk.\ What is the maintenance margin?\ I. The maintenance margin is the maximum amount of the margin that must be maintained over the fime the firm is selling its stock.\ II. The maintenance margin is the minimum amount of the margin that must be maintained over the time the investor holds the investment.\ III. The maintenance margin is the average amount of the margin that must be maintained over the time the firm is looking for sources to raise funds.

Explain how margin requirements can affect the potential return and risk from investing in a stock. I. Purchasing stock on margin not only increases the potential return from investing in a stock but also magnifies the potential losses. II. Purchasing stock on margin increases the potential return from investing in a stock, that results in a lower risk of investing. III. Purchasing stock on margin increases both the potential return and the potential losses from investing in a stock but does not have any impact on risk. What is the maintenance margin? I. The maintenance margin is the maximum amount of the margin that must be maintained over the time the firm is selling its stock. II. The maintenance margin is the minimum amount of the margin that must be maintained over the time the investor holds the investment. III. The maintenance margin is the average amount of the margin that must be maintained over the time the firm is looking for sources to raise funds