Exhaust Price


DEFINITION of 'Exhaust Price'

A discount price at which a broker must liquidate a client's equity position, which was purchased on margin, to meet a margin call. The stocks are sold at the exhaust price when the client cannot provide the funds or refuses to maintain the margin.

BREAKING DOWN 'Exhaust Price'

When a client buys stock on margin, he or she is borrowing money from the broker to enter into a position. A sharp price decline in the asset will produce a margin call, where the holder of the assets must provide additional cash to back his or her borrowing. The exhaust price is usually set to the value that would cover the margin balance, protecting the brokerage from a defaulted loan.

  1. Maintenance Margin

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

    1. To convert assets into cash or equivalents by selling them ...
  5. Broker

    1. An individual or firm that charges a fee or commission for ...
  6. Clowngrade

    An upgrade or downgrade of a security for reasons considered ...
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    The DeMarker Indicator is a technical price oscillator that compares a security's price maximums and minimums over specific ... Read Full Answer >>
  2. What is the difference between leverage and margin?

    In financial terms, leverage is reinvesting debt in an effort to earn greater return than the cost of interest. When a firm ... Read Full Answer >>
  3. Why do you need a margin account to short sell stocks?

    The reason that margin accounts and only margin accounts can be used to short sell stocks has to do with Regulation T, a ... Read Full Answer >>
  4. How is margin interest calculated?

    Before running a calculation you must first find out what rate your broker-dealer is charging to borrow money. The broker ... Read Full Answer >>
  5. How long does a stock account have to be dormant before it can be escheated?

    A stock account is typically considered dormant and eligible for escheatment after five years of inactivity; however, this ... Read Full Answer >>
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