USA HISTORY

Detailed explanation-1: -Buying on margin occurs when an investor buys an asset by borrowing the balance from a bank or broker. Buying on margin refers to the initial payment made to the broker for the asset-for example, 10% down and 90% financed. The investor uses the marginable securities in their broker account as collateral.

Detailed explanation-2: -Buying on margin involves getting a loan from your brokerage and using the money from the loan to invest in more securities than you can buy with your available cash. Through margin buying, investors can amplify their returns-but only if their investments outperform the cost of the loan itself.

Detailed explanation-3: -As with any loan, when you buy securities on margin you have to pay back the money you borrow plus interest, which varies by brokerage firm and the amount of the loan. Margin interest rates are typically lower than those on credit cards and unsecured personal loans.

Detailed explanation-4: -What is buying on margin? An investor can buy securities using money borrowed from a brokerage firm (rather than paying for the securities in full). This is known as “buying on margin.” Buying on margin requires opening a margin account and depositing an initial amount of purchased securities.

Detailed explanation-5: -Buying on margin involves an investor’s brokerage firm lending the investor money against the value of cash or investment assets currently in the margin trading account. The amount borrowed is referred to as a margin loan that the investor can use to purchase additional investments.