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Margin

• This allows investors to buy securities by borrowing money from a broker. The margin is the difference between the market value of a stock and the loan a broker makes. Related: security deposit (initial).

• Equals sales revenue minus the cost of goods sold and minus other variable expenses, such as shipping

• The use of borrowed money to purchase securities. This action is expressed by the phrase buying on margin.

• (1) In a repo or a reverse repurchase transaction, the amount by which the market value of the securities collateralizing the transaction exceeds the amount lent. (2) In futures markets, money buyers and seller must put up to ensure performance on the contracts. (3) In options, similar meaning as in futures for sellers of put and call options.

• Is the amount required to open a position. This amount is different for each futures market depending on each contract. Also, the dollar amount varies for each security and option account because of the variations in holdings among all accounts.

 
 

Follow this link for all the terms related to margin.

 
 Embedded terms in definition
 Broker
Call option
Call
Contract
Cost of goods sold
Expenses
Futures market
Futures
Market value
Market
Options
Option
Position
Purchase
Repo
Reverse
Sales
Securities
Security
Stock
Variable expenses
Variable
 
 Referenced Terms
 Arms: See Adjustable Rate Mortgages.Adjustable rate mortgage. A mortgage that features predetermined adjustments of the loan interest rate at regular intervals based on an established index. The interest rate is adjusted at each interval to a rate equivalent to the index value plus a predetermined spread, or Margin, over the index, usually subject to per-interval and to life-of-loan interest rate and/or payment rate caps.

 Average profit margin: See Average Pre-tax Profit Margin.

 Borrow: Is the term which indicates a credit relationship. Insecurities it can refer to borrowing funds or borrowing securities. When borrowing funds it is for Margin for financing purposes. When borrowing securities, it is for short selling or hedging purposes.To obtain or receive money on loan with the promise or understanding that it will be repaid.

 Buying power: Refers to the amount of securities that can be purchased in a Margin account.

 Call money rate: Also called the broker loan rate, the interest rate that banks charge brokers to finance Margin loans to investors. The broker charges the investor the call money rate plus a service charge.

 
 Related Terms
 

<< Mapping Margin account >>

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