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Fact or Fiction: Can You Lose It All on a Margin Call?
by Staff
Buying stocks on margin is a way to maximize profits when stock prices rise, but it's a risky move that can wipe your portfolio clean. Take this quiz to see exactly how you can go broke on a margin call.

If you open a margin account with your broker, you can buy twice as much stock as you actually have the cash to purchase.

  • Fact
  • Fiction

You can invest any amount of money into a margin account.

  • Fact
  • Fiction

Buying stock on margin is like buying it with a credit card.

  • Fact
  • Fiction

When a stock purchased on margin loses value, the loss comes out of your collateral stock first.

  • Fact
  • Fiction

The 25 percent maintenance minimum set by federal regulations is universal among brokers.

  • Fact
  • Fiction

If you fall below your maintenance minimum and your broker issues a margin call, federal law requires that they give you 48 hours to meet the minimum by selling stock or depositing cash.

  • Fact
  • Fiction

Buying stocks on margin is a good idea if you prefer to make infrequent trades and don't spend much time constantly watching your stock prices.

  • Fact
  • Fiction

If your margin stocks fall enough in value, you could actually end up owing your broker money.

  • Fact
  • Fiction

In 2008, a CEO lost almost half a billion dollars on a margin call.

  • Fact
  • Fiction

Buying on margin is a relatively advanced investment strategy not suited for stock market beginners.

  • Fact
  • Fiction

You can purchase any stock on margin.

  • Fact
  • Fiction

Margin calls are issued via registered mail or courier.

  • Fact
  • Fiction

If you have stocks worth $10,000, bought on margin with $5,000 in cash, you'll have no equity if the stock's value falls 50 percent.

  • Fact
  • Fiction

You can control when your broker sells off your shares after a margin call.

  • Fact
  • Fiction

If a stock bought on margin increases in value and you sell it, some portion of the profit will be used to repay the broker's loan.

  • Fact
  • Fiction

As long as a stock bought on margin neither gains nor loses value, you should hold onto it, since you aren't losing anything.

  • Fact
  • Fiction

The minimum amount of cash needed to buy a stock on margin, usually 50 percent, is regulated by the Federal Reserve Board's Regulation T.

  • Fact
  • Fiction

It's safe to put all of your savings into a margin stock as long as you're confident it will increase in value.

  • Fact
  • Fiction

Stock dividends should never be taken into account when calculating profit from margin stocks.

  • Fact
  • Fiction

If your stocks bought on margin fall in value, you can wait out the market until they rise again.

  • Fact
  • Fiction