Margin (redirected from mesometric margin)

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.

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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.

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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.

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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.

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Margin

What Does Margin Mean?

(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.

Investopedia explains Margin

(1) Buying with borrowed money can be extremely risky because both gains and losses are magnified. That is, although the potential for greater profit exists, it comes with the potential for greater losses. Margin also subjects the investor to a number of unique risks, such as interest payments for the use of the borrowed money. (2) For example, if an investor holds futures contracts in a margin account, that investor has to maintain a certain level of margin, depending on how the market value of the contracts changes. (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%.

Related Terms:
• Leverage
• Maintenance Margin
• Margin Account
• Margin Call
• New York Stock Exchange—NYSE

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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.