Call Money Rate


DEFINITION of 'Call Money Rate'

The interest rate on a type of short-term loan that banks give to brokers who in turn lend the money to investors to fund margin accounts. For both brokers and investors, this type of loan does not have a set repayment schedule and must be repaid on demand.

BREAKING DOWN 'Call Money Rate'

Trading on margin is a risky strategy in which investors make trades with borrowed money. The advantage of margin trading is that investment gains are magnified; the disadvantage is that losses are also magnified. When investors trading on margin experience a decline in equity past a certain level relative to the amount they have borrowed, the brokerage will issue a margin call that requires them to deposit more cash in their account or to sell enough securities to make up the shortfall.

  1. Call Money

    Money loaned by a bank that must be repaid on demand. Unlike ...
  2. Margin Call

    A broker's demand on an investor using margin to deposit additional ...
  3. Margin Account

    A brokerage account in which the broker lends the customer cash ...
  4. Broker's Call

    The interest rate charged by banks on loans made to broker-dealers, ...
  5. House Maintenance Requirement

    The minimum amount of equity that an account holder must maintain ...
  6. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin ...
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