Buying securities by paying only a percentage (a margin) of the purchase price and borrowing the remainder. The loan is usually arranged by the investor's broker. (See also Margin requirement.)
The act of buying securities with credit available through a relationship with a broker, called a margin account.
Using a portion of existing securities in a person's account to purchase more securities on credit. The amounts are closely regulated by the Federal Reserve Board. If the amount used as equity decreases in value below the subscribed level as dictated by the Federal Reserve Board, a "margin call" will be issued. At that time, the investor must provide more money or securities to the account to keep the equity in the account at or above the amount dictated. | back to educate yourself
Buying a security partly with borrowed money.
Buying securities in part with borrowed money.
Buying securities on credit in an established margin account at a brokerage firm. See: Buying Power; Margin; Margin Account
A margin account enables an investor to borrow money for investing. It's like a credit line for security purchases. An investor must deposit a minimum amount of cash or securities in her account in order to borrow a certain percentage. Essentially this allows an investor to purchase more of an investment without really paying for it. There is an interest rate charged on this credit line which is based on the broker call rate, also known as the broker loan rate. It is typically less than rates banks charge. Investors must meet initial equity requirement of 50% established by Reg T. Currently all securities that are traded on an exchange like the New York Stock Exchange (NYSE) and Over The Counter (OTC) are eligible for margin account purchase if their value is at least $5 per share.
A risky short-term strategy where a buyer borrows money from a broker to make an investment. The buyer believes the stock price will rise and is trying to maximize profits by investing more money in the stock.
Purchasing a security partly with borrowed money.