Margin Account

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Dictionary Says

Definition of 'Margin Account'

A brokerage account in which the broker lends the customer cash to purchase securities. The loan in the account is collateralized by the securities and cash. If the value of the stock drops sufficiently, the account holder will be required to deposit more cash or sell a portion of the stock.
Investopedia Says

Investopedia explains 'Margin Account'

In a margin account, you are investing with your broker's money. By using leverage in such a way, you magnify both gains and losses.

Related Definitions

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    Broker's Call

    The interest rate charged by banks on loans made to broker-dealers, who use these loan proceeds to make margin loans to their clients. These broker's call loans are payable by the ...
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  • Buying Power

    The money an investor has available to buy securities. In a margin account, the buying power is the total cash held in the brokerage account plus maximum margin available.Also referred ...
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  • Borrowed Capital

    Funds borrowed from either individuals or institutions. Borrowed capital can be used in a number of ways. Investors use borrowed capital to increase their potential investment returns; ...
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    • Remargining

      The process of bringing an account up to minimum equity standards by depositing more cash or equity. This typically occurs after the account holder has received a margin call.When a ...
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    • Cash Account

      A regular brokerage account in which the customer is required by Regulation T to pay for securities within two days of when a purchase is made.
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    • Call Deposit Account

      A bank account for investment funds that offers the advantages of both a savings and a checking account. A call deposit account, like a checking account, has no fixed deposit period, ...
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    • Current Market Value - CMV

      The resale valuation attached to a security held long in an investor's margin account. The current market value is usually taken as the closing price for listed securities or the bid ...
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    • Maintenance Margin

      The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and NASD, after an investor has bought securities on margin, the minimum required ...
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    • Margin Call

      A broker's demand on an investor using margin to deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin. Margin calls occur ...
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    • Initial Margin

      The percentage of the purchase price of securities (that can be purchased on margin) that the investor must pay for with his or her own cash or marginable securities. Also called the ...
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