When Pete purchases $10,000 in stock by using $6,000 of his own money and borrowing the remaining $4,000 from his broker, he is buying stock Blank______.Multiple choice question.on accountillegallyon margin
Question
When Pete purchases 6,000 of his own money and borrowing the remaining $4,000 from his broker, he is buying stock Blank______.Multiple choice question.on accountillegallyon margin
Solution
Pete is buying stock "on margin". This means he is borrowing money from his broker to purchase stock. He is not buying it "on account" because this term is typically used in accounting to refer to purchases made on credit. He is also not buying it "illegally" because buying stock on margin is a legal practice, although it does come with higher risk.
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