margin (redirected from free margin (margo liber))

Margin

1. Borrowed money that is used to purchase securities. This practice is referred to as 'buying on margin'.

2. The amount of equity contributed by a customer as a percentage of the current market value of the securities held in a margin account.

3. In a general business context, the difference between a product's (or service's) selling price and the cost of production. 4. The portion of the interest rate on an adjustable-rate mortgage that is over and above the adjustment-index rate. This portion is retained as profit by the lender.

Notes:

1. Buying with borrowed money can be extremely risky because both gains and losses are amplified. That is, while the potential for greater profit exists, this comes at a hefty price -- the potential for greater losses. Margin also subjects the investor to a number of unique risks such as interest payments for use of the borrowed money.

2. For example, if you hold futures contracts in a margin account, you have to maintain a certain amount of margin depending on how the market value of the contracts change.

3. Gross profit margin (which is the difference between revenue and expenses) is one measure of a company's performance.

4. The formula for calculating the interest rate on an adjustable-rate mortgage is the adjustment-index rate (e.g. Treasury Index) plus the percentage of the margin. For example, if the Treasury Index is 6% and the interest rate on the mortgage is 8%, the margin is 2%.

See also: Adjustable-Rate Mortgage - ARM, Broker's Call, Buying Power, Call Loan, Equity, Initial Margin, Maintenance Margin, Margin Account, Margin Call, Minimum Margin, SPAN Margin, Treasury Index

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Margin

Allows investors to buy securities by borrowing money from a broker. The margin is the difference between the market value of a stock and the loan a broker makes. Related: Security deposit (initial). In the context of hedging and futures contracts, the cash collateral deposited with a trader or exchanged as insurance against default.

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margin

1. The amount of funds that must be deposited when purchasing securities. See also initial margin requirement.

2. The equity in an investor's account. See also maintenance margin requirement.