Exhaust Price

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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.

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RELATED FAQS
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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 >>
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    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 >>
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