Buying On Margin

Filed Under » , , ,
Dictionary Says

Definition of 'Buying On Margin'

The purchase of an asset by paying the margin and borrowing the balance from a bank or broker. Buying on margin refers to the initial or down payment made to the broker for the asset being purchased. The collateral for the funds being borrowed is the marginable securities in the investor's account. Before buying on margin, an investor needs to open a margin account with the broker. In the U.S., the amount of margin that must be paid for a security is regulated by the Federal Reserve Board.
Investopedia Says

Investopedia explains 'Buying On Margin'

Based on creditworthiness and other factors, the broker sets the minimum or initial margin and the maintenance margin that must exist in the account before the investor can begin buying on margin. Maintenance margin refers to the minimum amount of money that must exist in the account before the broker forces the investor to deposit more money. Let's say an investor deposits $10,000 and the maintenance margin is 50% ($5,000). As soon as the investor's equity dips so much as a dollar below $5000, the broker may call the investor and demand that he/she deposit additional money to bring the balance back to maintenance margin level.
Search results for

'Buying On Margin'

  • CFA Level 1 Study Guide - Securities Markets - Buying on Margin ...

    http://www.investopedia.com/exam-guide/cfa-level-1/securities-markets/buying-on-margin-maintenance-margin.asp
    Learn the process of buying stock on margin. ... 12.5 Exchange Market Characteristics;
    12.6 Short Selling; 12.7 Buying on Margin and Maintenance Margin; ...

  • Margin Trading: What Is Buying On Margin? | Investopedia

    http://www.investopedia.com/university/margin/margin1.asp
    Buying on margin consists of borrowing money from a broker to purchase stock. Find
    out how it happens here. ... Margin Trading: What Is Buying On Margin? ...

  • Margin Trading: Introduction | Investopedia

    http://www.investopedia.com/university/margin/
    ... Next: Margin Trading: What Is Buying On Margin? ». Table of Contents. Margin Trading:
    Introduction; Margin Trading: What Is Buying On Margin? ...

  • Margin Trading: Conclusion | Investopedia

    http://www.investopedia.com/university/margin/margin5.asp
    ... Buying on margin is definitely not for everybody. ... Table of Contents. Margin Trading:
    Introduction; Margin Trading: What Is Buying On Margin? ...

  • Margin Trading: Introduction | Investopedia

    http://www.investopedia.com/university/margin
    ... Next: Margin Trading: What Is Buying On Margin? ». Table of Contents. Margin Trading:
    Introduction; Margin Trading: What Is Buying On Margin? ...

  • Margin Trading: Introduction | Investopedia

    http://www.investopedia.com/university/margin/default.asp
    ... Next: Margin Trading: What Is Buying On Margin? ». Table of Contents. Margin Trading:
    Introduction; Margin Trading: What Is Buying On Margin? ...

  • Margin Trading: The Risks | Investopedia

    http://www.investopedia.com/university/margin/margin4.asp
    ... Think a 50% loss is bad? It can get much worse. Buying on margin is the only
    stock-based investment where you stand to lose more money than you invested. ...

  • How do investors lose money when the stock market crashes?

    http://www.investopedia.com/ask/answers/06/marketcrash.asp
    ... $750. Another way that an investor can lose large amounts of money as a
    result of a stock market crash is by buying on margin. In ...

  • Simulator How-To Guide: Margin Accounts | Investopedia

    http://www.investopedia.com/university/simulator/margin-account.asp
    ... Once you start buying via margin, your buying power value will start falling and
    your cash account value will drop into the negative values (to denote that you ...

  • CFA Level 1 Study Guide - Fixed Income Investments - Institutional ...

    http://www.investopedia.com/exam-guide/cfa-level-1/fixed-income-investments/institutional-investors-financing-purchases.asp
    ... Covers buying on margin and repurchase agreements. ... 12.5 Exchange Market Characteristics;
    12.6 Short Selling; 12.7 Buying on Margin and Maintenance Margin; ...

Related Articles

Bank Rates
Product Today Last Wk
$10K MMA 0.50% 0.51%
MMA 0.45% 0.46%
6 Month CD 0.46% 0.47%
1 Year CD 0.70% 0.75%
5 Year CD 1.46% 1.46%
1 Year Jumbo CD 0.66% 0.67%
Rate data provided by Bankrate
Product Today Last Wk
$30K HELOC 4.59% 4.60%
$30K Home Equity Loan 5.74% 5.77%
$50K Home Equity Loan 5.45% 5.50%
$50K HELOC 4.24% 4.24%
$100K Home Equity Loan 5.41% 5.46%
$100K HELOC 4.13% 4.13%
Rate data provided by Bankrate
Product Today Last Wk
30 Year Fixed 3.80% 3.80%
15 Year Fixed 3.09% 3.11%
1 Year ARM 3.54% 3.53%
30 Year Fixed Jumbo 4.38% 4.38%
5/1 ARM 2.65% 2.69%
3/1 ARM 2.69% 2.69%
Rate data provided by Bankrate
Product Today Last Wk
60 Month Used Car Loan 4.51% 4.51%
48 Month Used Car Loan 4.35% 4.35%
48 Month New Car Loan 3.24% 3.24%
36 Month Used Car Loan 4.34% 4.36%
36 Month New Car Loan 3.11% 3.13%
60 Month New Car Loan 3.35% 3.34%
Rate data provided by Bankrate
Partner Links