Question

What is the practice of buying on margin?

(A) Purchasing stocks without any prior knowledge of the company
(B) Using bank loans to purchase stocks
(C) Pooling money with a group of investors to buy stock
(D) Buying stocks when they are low and selling them when they are high
(E) Purchasing consumer goods using an installment plan

Answer 1

The practice of buying on margin entails "(B) Using bank loans to purchase stocks," since this is favorable for many people who lack the proper funds "up front" to purchase the stocks.