Buying On Margin Great Depression -

A buyer could purchase a stock by putting down only of the total price in cash. The broker would cover the remaining 80% to 90%, charging interest on the loan. For example, if you wanted $1,000 worth of stock in a booming radio company, you only needed $100 of your own money.

A margin call occurs when the value of a stock drops below a certain point. To protect their loan, the broker demands that the investor immediately deposit more cash or sell the stock to cover the debt. buying on margin great depression

This "forced liquidation" created a downward spiral that couldn't be stopped. In a single day, billions of dollars in wealth vanished. But the damage wasn't contained to Wall Street. From Wall Street to Main Street A buyer could purchase a stock by putting