首页
登录
职称英语
Can you explain why people buy stock on margin? Suggested answers: a.Well, I
Can you explain why people buy stock on margin? Suggested answers: a.Well, I
游客
2025-06-03
3
管理
问题
Can you explain why people buy stock on margin?
选项
答案
Suggested answers:
a.Well, I don’t know much about stock market. As we all know, many people buy many things on credit, and stocks are no exception. Investors who qualify can make a stock purchase by paying 50 percent down and getting a loan for the remainder. This is called buying on a“margin”of 50 percent. The balance is borrowed at interest from the brokerage house and the stock certificates are deposited with the broker as security. The Federal Reserve Board regulates the minimum margins, the amount that must be paid in cash as a percentage of a purchase. The minimum margins vary, depending on whether there is need to stimulate the market or curb its speculative enthusiasm.
b.If an investor sells stock held on margin that has appreciated, the investor may pocket the profit and pay the broker the amount that was borrowed plus interest and commission. If the stock goes down, the broker can issue a“margin call,”and the investor is required to pay an additional amount into the account. If the owner cannot produce cash, some of the stock is sold at the investor’s loss. Buying stock on margin gives speculators (traders willing to gamble on high-risk situations) the opportunity of making more profit and also the risk of suffering greater losses.
c.At times the Federal Reserve Board requires a 100-percent margin, meaning that all stock must be paid for in cash. During the 1950s, for example, the margin rate varied from a low of 50 percent to a high of 90 percent. A low rate, of course, stimulates stock buying, while a high rate discourages it. The first concern of most investors is the safety of their purchases. If necessary they will often take lower dividends to avoid great risk. In contrast, speculators hope to see the price of their stocks go up, usually within months, or even days, They are more interested in the future of the stock than in its earning power at the time of purchase. People who believe they can outguess the market try to buy before prices rise and sell before they fall.
d.There is also a group of speculators known as“short sellers. ”A short seller is someone who invests money because he or she expects a particular stock to go down in value. This person sells “borrowed”stock, in hope of replacing it later with stock bought on the open market at a lower price. This is one of the riskiest ways of investing in the market, because the price of a stock that is doing very well may rise tenfold or more, in which case the“short”gets“squeezed”for a big loss. Selling short is governed by specific rules to prevent abuses of a type that occurred in an earlier era on Wall Street.
e.The largest security market in the world in terms of the number of different stocks and bonds traded is the over-the-counter (OTC) market. OTC is not located in any one place, but is primarily an electronic communications network of stock and bond dealers. The National Association of Securities Dealers, Inc. , which has the power to expel companies, supervises these stocks or dealers determined to be dishonest or insolvent. The over-the-counter market tends to get stocks of smaller companies, and by the 1990s had come to be known as a market where many of the fastest growing“high-tech-nology”stocks could be bought and sold. Again, information about trading activity can be acquired through newspapers, magazines, or electronically. A brokerage house usually handles purchases and sales of these stocks along with those on the major exchanges.
f.Many persons who do not feel qualified to decide which stocks to purchase, but who nevertheless want to participate in the stock market in hopes of making a profit by doing so, turn to mutual funds. A mutual fund combines funds of its shareholders, which may be in small amounts, and invests large blocks of money in a varied portfolio of stocks, this reducing the risk, which is another reason why many people prefer this method of investing in stocks.
g.Another advantage of mutual funds to the customer is that the fund’s managers get professional advise from staff analysts. It is possible for a fund to employ such persons because the operation is on a large scale. There are dozens of kinds of mutual funds. Some are designed for income. Some for capital appreciation, and others are speculative with the chance for large gains or severe losses. Some deal only with stocks of specific industries, or stocks of foreign companies, or companies whose activities benefit the environment. The number and variety of funds proliferated greatly in the 1980s; the total number of funds jumped from 524 to 2,918 over the decade, while the portion of U. S. households holding shares in mutual funds increased from 6 percent in 1979 to 25 percent in 1989.
解析
over-the-counter stocks场外交易股票。capital appreciation股本升值。brokerage经纪人佣金。 remainder余数,剩余部分。block冻结,封锁。
转载请注明原文地址:https://tihaiku.com/zcyy/4102581.html
相关试题推荐
Explainingbackgroundtoanenquiry回应查询说明背景Ihavelookedintothismatter.I
CustomerRelations:howtocreategoodcustomerrelationsSuggestedanswers:
Purchasing:howtoensurethatsuppliersconsistentlymeetdeadlinesSuggesteda
StaffDevelopment:theimportancetoacompanyofreliableemployeesSuggesteda
Whatareyourstrengths?Suggestedanswers:a.Ihavehands-onexperience.If
CouldIhaveyourmark-sheet,please?Suggestedanswers:a.Yes,ofcourse.
What’syourfirstname?Suggestedanswers:a.MynameisPeterSmith.Myfirst
Grooming?Suggestedanswers:a.IthinkIammoreconcernedaboutpersonalhyg
Howoftendoyoushopforclothes?Suggestedanswers:a.Shoppingisanoccupa
Howwouldyoudefineyourpersonalstyle?Suggestedanswers:a.Fashionisaw
随机试题
[originaltext]M:ProfessorJohnson’slectureissoboring.Idon’tthinkit’su
Asawisemanoncesaid,weareallultimatelyalone.Butan【C1】______number
ICMP协议的作用是()。A.报告IP数据报传送中的差错 B.进行邮
在这种网络中使用的DSDV(Destination-sequencedDist
传染病流行过程需要的三个基本条件是()A.传染源、传播途径、易感人群 B
《金匮要略》首先将水肿分为五类,其中不包括以下哪一项A.风水 B.皮水 C.
关于仪器仪表及工器具表述正确的是()。常用仪器仪表、工器具应存放在专用橱柜
硫喷妥钠静脉麻醉哪种疾病禁忌使用A.脓肿切开引流 B.人工流产 C.烧伤换药
将原有股份均等地拆成若干较小的股份是指()。 A.股份分割B.股份重组
对于工程质量的监督管理,我国实行()统一监督管理。 A.国务院B.国家发改
最新回复
(
0
)