Margin

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Related to margins: profit margins

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.

Margin

1. Money that an investor has borrowed from a broker in order to buy securities. An investor who buys on margin can realize huge gains if the price of the security moves in a favorable direction; however, he/she also takes on a great deal of risk because it may not move in such a direction. See also: minimum maintenance, margin call.

2. A measure of how well a company controls its costs. It is calculated by dividing a company's profit by its revenues and expressing the result as a percentage. The higher the margin is, the better the company is thought to control costs. Investors use the margin to compare companies in the same industry as well as between industries to determine which are the most profitable. It is also called the profit margin.

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.

Margin.

Margin is the minimum amount of collateral -- in either cash or securities -- you must have in your margin account to buy on margin, sell short, or invest in certain derivatives.

The initial margin requirement is set by federal law and varies from product to product. For example, to buy stock on margin, you must have at least 50% of the purchase price in your account.

After the initial transaction, maintenance rules set by the self-regulatory organizations, such as the New York Stock Exchange (NYSE) and NASD, apply.

Under those rules, you must have a minimum of 25% of the total market value of the margined investments in your account at all times. Individual firms may set their maintenance requirement higher -- at 30% or 35%, for example.

If your equity in the account falls below the maintenance level, you'll receive a margin call for additional collateral to bring the account value back above the minimum level.

margin

the difference between selling price and cost price of a PRODUCT or FINANCIAL SECURITY. See PROFIT MARGIN, SPREAD.

Margin

On an ARM, an amount (usually two to three percentage points) that is added to the interest rate index to obtain the interest rate charged the borrower after the initial rate period ends.

See Adjustable Rate Mortgage (ARM)/How the Interest Rate on an ARM Is Determined.

Margin

A percentage of the full price of a security that must be paid as a down payment by an investor buying on credit. The required margin fluctuates subject to federal regulations.
References in classic literature ?
There were fringes of ice along the sea margin, with drifting masses further out; but the main expanse of that salt ocean, all bloody under the eternal sunset, was still unfrozen.
Feeling this, I stood a good while behind her, writing on the margin of her book.
But, in the vicinity of the gate of Benjamin, the wall arose by no means from the margin of the fosse.
On this side, near at hand, great mansions, white with moonlight, glared out from the midst of masses of foliage that lay black and shapeless in the shadows that fell from the cliff above--and down in the margin of the lake every feature of the weird vision was faithfully repeated.
Then there was well-bred economy, which in those days made show in dress the first item to be deducted from, when any margin was required for expenses more distinctive of rank.
Then he nodded, hastily scrawled some dimensions on the margin of the little drawing and settled down again to work.
This meant longer hours of travel, and Daylight, for good measure and for a margin against accidents, hit the trail for twelve hours a day.
Not one of them had been reproved; they had chattered and giggled and drawn caricatures on the margin of the paper, as freely as if the master had left the room.
That thoughtless deity immediately plunged into the pool, which became so salivated that the trees about its margin all came loose and dropped out.
It was growing late when Jamrach came to the margin of what appeared to be a lake of black ink, and there the road terminated.
They do not make the whole three-sided pyramidal base of any one cell at the same time, but only the one rhombic plate which stands on the extreme growing margin, or the two plates, as the case may be; and they never complete the upper edges of the rhombic plates, until the hexagonal walls are commenced.
On this occasion they wandered to the album, and toyed absently about the margin of the little water-colour drawing.