Question

Which of the following best explains how buying on margin

increases the leverage of currency traders?
O A. Buying on margin allows traders to sell shares in a
company that they do not yet own.
O B. Margin buying gives traders a profit rate that is one unit
higher
O c. Borrowing money allows traders to make large
purchases without a large amount of money up front.
0 D. Currency purchases can only be made on the large
scale, enabled by borrowing from currency brokers.

Answer 1

C. borrowing money allows traders to make large purchases without a large amount of money up front.

Step-by-step explanation:

Buying on margin involves buying goods and services in a high quantity without having to pay in full for the goods purchased. The traders in this case borrowed money to make large purchases without a large amount of money upfront. A higher profit is usually accrued in this method but risky in the sense that when there are issues with goods depreciation then the traders suffer huge losses and have to repay the loans at higher interest rates.