Question: Regarding buying on margin, pick the single incorrect statement below: a. If the asset price declines, the trader might have to post cash to increase
Regarding buying on margin, pick the single incorrect statement below: a. If the asset price declines, the trader might have to post cash to increase the balance held with the broker. b. If the asset price declines just a little bit just after the trader has initiated the margin position with the broker, it is unlikely the trader has, at that point in time, to post cash to increase the balance held with the broker. c. Buying on margin brings considerable credit risk to the broker that lends to the trader. d. A trader buys on margin if she borrows from a broker cash equivalent to a share of the total cost of the asset, typically up to half of the total cost of the asset.
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