Which one of the following statements about margin trading is correct?
A) The Securities Exchange Commission sets the minimum margin requirement for margin trading.
B) If Fred buys $1,000 worth of stock using 60% margin, he will need to pay $600 in cash to make the purchase.
C) Margin traders are willing to accept lower return to reduce their risk.
D) Margin traders are pessimistic about the future price of the stock.
Answer: B
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