Margin Call

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DEFINITION of '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 when your account value depresses to a value calculated by the broker's particular formula.

This is sometimes called a "fed call" or "maintenance call."

BREAKING DOWN 'Margin Call'

You would receive a margin call from a broker if one or more of the securities you had bought (with borrowed money) decreased in value past a certain point. You would be forced either to deposit more money in the account or to sell off some of your assets.

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RELATED FAQS
  1. How much can I borrow with a margin account?

    An investor with a margin account can usually borrow up to 50% of the total purchase price of marginable investments. The ... Read Full Answer >>
  2. What does it mean when I get a Fed margin call?

    Understanding fed margin calls and how they affect your trading account is part of investing basics. A margin account allows ... Read Full Answer >>
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    The stock market crash of 1929 was due to a market that was overbought, overvalued and excessively bullish, rising even as ... Read Full Answer >>
  4. What are the biggest risks involved with financial spread betting?

    Financial spread betting is a type of financial derivatives product used to speculate the price movements of a security. ... Read Full Answer >>
  5. Why is purchasing stocks on margin considered more risky than traditional investing?

    Buying on margin involves borrowing money from a broker to purchase stock. A margin account increases your purchasing power ... Read Full Answer >>
  6. What are my options when I get a margin call?

    The two options available to an investor when he receives a margin call are to deposit additional funds to his trading account ... Read Full Answer >>
  7. Do you have to sell your stocks when you get a margin call?

    A margin call is a demand from a broker that an investor bring his margin account up to an acceptable level. Many investors ... Read Full Answer >>
  8. How exactly does buying on margin work and why is it controversial?

    Buying on margin is an investment strategy that allows investors to leverage cash or securities held within a margin-approved ... Read Full Answer >>
  9. What is the difference between extensive margin and intensive margin in economics?

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    An account liquidation occurs when the holdings of an account are sold off by the firm in which the account was created. ... Read Full Answer >>
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    Your broker's actions are not legal unless he or she sold the securities under certain conditions. Let's look at the two ... Read Full Answer >>
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